<PAGE>
Exhibit 2.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
BETWEEN
THE BOEING COMPANY
AND
MID-WESTERN AIRCRAFT SYSTEMS, INC.
----------
Dated as of February 22, 2005
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TABLE OF CONTENTS
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SECTION 1 PURCHASE AND
SALE OF ASSETS................................... 1
1.1 Purchase and
Sale of Assets................................... 1
1.2 Assumption of
Liabilities..................................... 6
1.3 Determination of
Final Purchase Price......................... 9
1.4 Allocation of
Final Purchase Price............................ 10
1.5 Allocation of
Expenses........................................ 11
1.6 Purchase Price
Adjustment; Determination of Final Purchase
Price......................................................
13
1.7 Payment of
Purchase Price at Closing; Adjustment for
Overpayment or Underpayment of Purchase Price..............
17
SECTION 2
CLOSING.......................................................
17
2.1 Closing
Date.................................................. 17
2.2 Buyer's Closing Date
Deliveries............................... 17
2.3 Seller's Closing
Date Deliveries.............................. 22
SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLER......................
26
3.1 Organization and
Power and Authority of Seller................ 26
3.2 Authority of
Seller; Conflicts................................ 26
3.3 Financial
Statements.......................................... 27
3.4 Operations Since
Interim Date................................. 28
3.5
Taxes.........................................................
30
3.6 Governmental
Permits.......................................... 30
3.7 Real
Property.................................................
31
3.8 Assets of the
Business........................................ 34
3.9
Software......................................................
34
3.10
No
Violation, Litigation or Regulatory Action.................
34
3.11
Contracts.....................................................
35
3.12
Title to
Assets............................................... 36
3.13
No
Brokers....................................................
37
3.14
ERISA.........................................................
37
3.15
Environmental Compliance......................................
37
3.16
Employee
Relations and Agreements............................. 38
3.17
No
Undisclosed Liabilities....................................
39
3.18
Security
Clearance............................................ 39
3.19
Employees
of the Business..................................... 39
3.20
Government
Contracts.......................................... 40
3.21
Services......................................................
40
3.22
Insurance.....................................................
40
3.23
Customers
and Suppliers....................................... 40
3.24
Inventory.....................................................
41
3.25
No
Material Adverse Effect....................................
41
3.26
Product
Warranty and Product Liability........................ 41
3.27
Export/Foreign Corrupt Practices Act..........................
41
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3.28
HMSGTA
Consistency............................................
42
SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER.......................
42
4.1 Organization of
Buyer......................................... 42
4.2 Authority of
Buyer............................................ 42
4.3 No Violation of
Law and Agreements............................ 43
4.4 No Litigation or
Regulatory Action............................ 43
4.5 No
Brokers....................................................
44
4.6 Financial
Ability............................................. 44
4.7 Capital
Structure............................................. 44
4.8 Service
Acknowledgment........................................ 44
4.9 Independent
Analysis.......................................... 44
4.10
ITAR..........................................................
44
SECTION 5 ACTION PRIOR
TO THE CLOSING DATE.............................. 45
5.1 Access to
Information......................................... 45
5.2 Consents of
Third Parties; Governmental Approvals............. 46
5.3 Operations on or
Prior to the Closing Date.................... 47
5.4 Notice of Events
or Circumstances............................. 50
5.5
Confidentiality...............................................
50
5.6 Notification of
Certain Matters............................... 50
5.7 HSR Filings;
CFIUS............................................ 51
5.8 No
Negotiation................................................
52
5.9 Itemization of
IRB Assets..................................... 52
5.10
Title
Report and Survey.......................................
52
5.11
Delivery
of Audited Financial Statements...................... 53
SECTION 6 ADDITIONAL
AGREEMENTS......................................... 53
6.1 Use of
Names..................................................
53
6.2 Employees;
Employee Benefits.................................. 54
6.3
Insurance.....................................................
58
6.4 Release of
Guaranties......................................... 58
6.5 Intercompany
Work Orders...................................... 58
6.6 Bid
Opportunities.............................................
58
6.7 Excluded Supply
Contracts/Excluded Equipment Leases/Other
Supply Contracts...........................................
59
6.8 Geographical
Location......................................... 59
6.9 Confidentiality
Following the Closing......................... 59
6.10
Personnel
Records............................................. 60
6.11
The IDS
Transaction........................................... 60
6.12
Noncompetition, Nonsolicitation and Nondisparagement..........
61
6.13
Environmental Matters.........................................
63
6.14
Actuarial
Determination Difference............................ 68
6.15
Export
Controls...............................................
69
6.16
Future
Conveyances............................................
69
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6.17
Audited
2001 Financials....................................... 69
6.18
Damaged
Assets................................................ 69
6.19
Estoppel
Certificates......................................... 70
6.20
Buyer's
Capital Structure..................................... 70
6.21
Assignment
of R&D Inventions..................................
70
SECTION 7 CONDITIONS
PRECEDENT TO OBLIGATIONS OF BUYER.................. 71
7.1 No
Misrepresentation or Breach of Covenants and Warranties....
71
7.2 Necessary
Governmental Approvals.............................. 71
7.3 Deliveries by
Seller.......................................... 72
7.4 No
Injunction.................................................
72
7.5 Required
Consents............................................. 72
7.6 HSR Waiting
Period; CFIUS..................................... 72
7.7 Title Insurance
and Surveys................................... 72
7.8 The IDS
Transaction........................................... 73
7.9
Litigation....................................................
73
7.10
Due
Diligence.................................................
73
7.11
Financing.....................................................
73
7.12
Collective
Bargaining Agreements; Acceptance of Employment
Offers.....................................................
73
7.13
Acceptance
of Employment Offers............................... 74
7.14
McConnell
Air Force Base...................................... 74
7.15
Utility
Infrastructure........................................ 74
7.16
Audited
Financial Statements.................................. 74
7.17
Export
Licenses...............................................
74
SECTION 8 CONDITIONS
PRECEDENT TO OBLIGATIONS OF SELLER................. 74
8.1 No
Misrepresentation or Breach of Covenants and Warranties....
74
8.2 Necessary
Governmental Approvals.............................. 75
8.3 Payment of
Tentative Purchase Price........................... 75
8.4 Delivery by
Buyer............................................. 75
8.5 Required
Consents............................................. 75
8.6 No
Injunction.................................................
75
8.7 HSR Waiting
Period; CFIUS..................................... 75
8.8
Litigation....................................................
75
8.9 Sufficient
Employees.......................................... 76
8.10
McConnell
Air Force Base...................................... 76
8.11
Utility
Infrastructure........................................ 76
8.12
Buyer's
Capital Structure..................................... 76
8.13
Export
Licenses...............................................
76
8.14
Total
Leverage Ratio..........................................
76
SECTION 9
INDEMNIFICATION...............................................
76
9.1 Indemnification
by Seller..................................... 76
9.2 Indemnification
by Buyer...................................... 77
9.3 Notice of
Claims.............................................. 78
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9.4 Third Person
Claims........................................... 79
9.5 Environmental
Indemnification................................. 81
9.6
Limitations...................................................
85
9.7
Mitigation....................................................
85
9.8
Subrogation...................................................
85
9.9 No
Offset.....................................................
86
SECTION 10 TERMINATION 1
................................................ 86
10.1
Termination...................................................
86
SECTION 11 GENERAL
PROVISIONS............................................ 87
11.1
Survival
of Covenants......................................... 87
11.2
No Public
Announcement........................................ 87
11.3
Notices.......................................................
87
11.4
Successors
and Assigns........................................ 88
11.5
Records
and Other Assistance after Closing.................... 88
11.6
Entire
Agreement..............................................
91
11.7
Interpretation................................................
91
11.8
Amendments
and Waivers........................................ 93
11.9
Bulk Sales
Laws............................................... 93
11.10
Expenses
..................................................... 94
11.11
Partial
Invalidity............................................ 94
11.12
Execution in
Counterparts; Facsimile.......................... 94
11.13
Governing
Law................................................. 94
11.14
Jurisdiction..................................................
94
11.15
Attorneys'
Fees............................................... 94
11.16
Time of
Essence............................................... 94
11.17
Disclaimer of
Warranties...................................... 94
11.18
References to
U.S. Dollars.................................... 95
11.19
Further
Assurances............................................ 95
11.20
No
Rescission.................................................
95
11.21
Dispute
Resolution............................................ 96
11.22
Code Section
6043A Reporting.................................. 97
SECTION 12 DEFINITIONS
.................................................. 97
12.1
Definitions...................................................
97
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LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
---------
l .1(a)(iii) Owned Property
1.1(a)(iv)
Governmental Permits
1.1(a)(v)
Assigned Contracts
1.1(a)(xiii) Leased Property
1.1(a)(xv) Other
Assets
1.1(a)(xvi) Included
Spares Inventory
1.1(b)(vi)
Nontransferable Government Permits
1.1(b)(xv)
Excluded Supply Contracts
1.1(b)(xvi) Excluded
Equipment Leases
1.1(b)(xxi) Excluded
Tooling
1.1(b)(xxv) Assets
Used by Shared Services Support
1.1(b)(xxvi) Assets of IDS Business
1.1(d)
Excluded Assets
1.2(a)(viii) Liabilities of Seller
1.4
Allocation of Final Purchase Price
1.6(b)
Exceptions to Closing Working Capital Statement
2.2(ee) McConnell
AFB Access Easement
3.2(b)
Seller's Conflicts
3.3(a)
Unaudited Financial Statements
3.4(b)
Post-Interim Date Occurrences
3.4(c)
Changes Since Interim Date
3.4(c)(ii)
Capital Expenditures Budget
3.6
Governmental Permits
3.7
Real Property
3.8
Assets of the Business
3.9(a)
Third-Party Software
3.9(b)
Software Contracts
3.10(a) Violations
of Law
3.10(b)
Litigation
3.10(c) Court
Orders
3.10(d) Litigation
Against Other Persons
3.10(f) Written
Notice or Communication from Governmental Authority
3.11(a)
Contracts
3.11(b)
Non-Binding Business Agreements
3.14(a) Benefit
Plans
3.14(c) Exceptions
to Benefits
3.14(e) Parachute
Payments
3.15
Exceptions to Environmental Compliance
3.16(a) Collective
Bargaining Agreements
3.16(b)
Strikes/Lock-outs/Proceedings
3.17
Undisclosed Liabilities
3.18
Security Clearance
3.19(a)
Employees
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3.20(a) Government
Contract Compliance
3.20(b) Government
Contract Disputes
3.20(c) Government
Contract Investigation
3.21
Services
3.22
Insurance
3.23(b) Disputes
with Another Business of Seller
3.23(c) Disputes
with Suppliers
3.24
Inventory
3.26(a) Product
Warranty
3.26(b) Warranty
Expense History
3.26(c) Exceptions
to Product Warranty
4.1
Organization of Buyer
4.4
No Litigation or Regulatory Action - Buyer
5.1
Freely Accessible Employees of the Business
5.3(a)
Required Operations Prior to Closing Date
5.3(b)
Exceptions to Prohibited Operations Prior to the Closing Date
5.6
Buyer's Knowledge Group
6.2(f)
Pension Asset Transfer
6.4
Guaranties
6.9(a)
Treatment of Confidential Information Following Closing
6.9(b)
Treatment and Use of Confidential Information Following Closing
6.12(a) Restricted
Products
6.12(f) No Hire
Group
7.5
Required Consents
7.7
Title Policy Endorsements
7.10
Due Diligence
7.12
Unions
7.17
Export Licenses
11.5(e) Tax
Returns
12.1
Permitted Encumbrances
vi
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EXHIBITS
--------
Exhibit A Assignment
and Assumption Agreement
Exhibit B Transition
Services Agreement
Exhibit C BCA Hardware
Material Services General Terms Agreement
Exhibit D Supplemental
License Agreement (Spare Parts)
Exhibit E Supplemental
License Agreement (Ancillary Maintenance Repair and
Overall - Components)
Exhibit F Supplemental
License Agreement (Ancillary Maintenance Repair and
Overall - Aircraft)
Exhibit G Supplemental
License Agreement (Know-How)
Exhibit H Employee
Consent - Medical, Employee Assistance Plan and Drug Free
Workplace Act Records
Exhibit I IDS Supply
Agreement
Exhibit J Bill of
Sale
Exhibit K
[Intentionally Deleted]
Exhibit L
[Intentionally Deleted]
Exhibit M Employee
Consent
Exhibit N Net Working
Capital
Exhibit O Site Access
and Environmental Support Services Agreement
Exhibit P Note Term
Sheet
Exhibit Q Memorandum
of Agreement (787)
Exhibit R Special
Business Provisions (Spares)
Exhibit S Special
Business Provisions (Sustaining)
Exhibit T Strategic
Alliance Agreement
Exhibit U General
Terms Agreement (Sustaining)
Exhibit V
Administrative Agreement
Exhibit W Sublease
(IRBs)
Exhibit X
[Intentionally Deleted]
Exhibit Y Electronic
Access Agreement
Exhibit Z Restrictive
Covenant (KDHE)
Exhibit AA Declaration of Restrictive Covenant and Easement
Exhibit BB IDS Site
Exhibit CC [Intentionally Deleted]
Exhibit DD Special Business Provisions (Tech Services)
Exhibit EE Special Business Provisions (Repair Services)
vii
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of February 22, 2005, by and
between The Boeing Company, a Delaware corporation ("Seller"), and
Mid-Western
Aircraft Systems, Inc., a Delaware corporation ("Buyer").
WITNESSETH:
WHEREAS, Seller is engaged in the business of (i) the design,
manufacture and support of structural components (including spare
parts), as
described in the Memorandum of Agreement (787) or in each
Attachment 1 on the
Closing Date to each of the Special Business Provisions
(Sustaining), and the
Special Business Provisions (Spares), for commercial airplanes,
including the
737, 747, 757, 767, 777 and the 787 aircraft in facilities in
Wichita, Kansas
and Tulsa and McAlester, Oklahoma, (ii) the manufacture of
components for
military platforms as described in Attachment 1 as of the Closing
Date to the
IDS Supply Agreement for the E-3 Airborne, Warning and Control
System Aircraft,
AC130U Gunship, KC-135 Tanker, UCAS, V-22, and treated core (low
observables)
for various rotorcraft in facilities in Tulsa and McAlester,
Oklahoma, (iii)
tooling design and manufacturing at the Manufacturing Center of
Excellence in
Wichita, Kansas, (iv) commercial aircraft fleet support as
currently conducted
in facilities in Wichita, Kansas and Tulsa and McAlester, Oklahoma,
and (v)
shared services support primarily related to the businesses
described in
Subsections (i), (ii), (iii) and (iv) of this paragraph in
facilities in
Wichita, Kansas and Tulsa and McAlester, Oklahoma (collectively,
the
"Business"). For the avoidance of doubt, the Business does not
include the
shared services support assets described in Section 1.1(b)(xxv) or
the assets
primarily used by the IDS Wichita Development and Modification
Center facilities
located in Wichita, Kansas;
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, the Assets (as hereinafter defined), and
Buyer is willing
to assume the Assumed Liabilities (as hereinafter defined), all on
the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual representations,
covenants and agreements hereinafter set forth and other good and
valuable
consideration, the receipt and sufficiency of which is
acknowledged, it is
hereby agreed between Buyer and Seller as follows (certain
initially capitalized
terms used herein are defined in Section 12):
SECTION 1 PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale of Assets.
(a) Upon the terms and subject to the conditions of this Agreement,
on
the Closing Date, Buyer shall purchase from Seller, and Seller
shall irrevocably
sell, convey, transfer, assign and deliver to Buyer, free and clear
of all
Encumbrances other than Permitted Encumbrances, all right, title
and interest of
Seller in and to all of the following (the "Assets"):
(i) The tangible personal property including, without
limitation,
the trade fixtures, furnishings, furniture, office supplies, tools
(but not
including the Excluded Tooling described in Section 1.1(b)(xxi)),
machinery,
vehicles, equipment and computer equipment (the "Equipment") (A)
primarily used
in the operation of the Business as currently
<PAGE>
conducted, (B) procurement coded for the Wichita Facility, wherever
located so
long as owned by Seller and in existence, or (C) procured by the
Business for
the 787 program;
(ii) The entire inventory of the Business, including, but not
limited to, all materials and supplies, all work in process and all
finished
products primarily related to the Business, but excluding any
inventory that has
been delivered FOB the Facilities or is in transit to another
business unit of
Seller on or prior to the Closing Date that is not part of the
Business (the
"Inventory");
(iii) All parcels of real property set forth on Schedule
1.1(a)(iii), including any and all buildings, structures and
improvements
located thereon and all fixtures attached thereto, all easements,
rights of way,
reservations, privileges, appurtenances and other estates and
rights benefiting
such real property and Seller's use thereof and all of Seller's
right, title and
interest, if any, in and to (a) all oil, gas and mineral rights
related to the
foregoing, (b) the land lying in the bed of any street, road or
avenue adjoining
the real property and (c) any condemnation award or any payment in
lieu thereof
for any taking thereof or for any change in grade of any street
road or avenue
adjacent thereto (collectively, the "Owned Property");
(iv) To the extent transferable by Seller to Buyer and not
required to be retained by Seller in order to continue to operate
its businesses
that are not part of the Business, all Governmental Permits related
to the
Business and all pending applications therefor or renewals thereof,
including,
without limitation, those set forth on Schedule 1.1(a)(iv);
(v) All Contracts primarily related to the Business other than
with regard to third-party customers and subject to the provisions
of Sections
5.2(d) and 5.2(e) (the "Assigned Contracts"), including but not
limited to the
Contracts set forth on Schedule 1.1(a)(v), but not including the
Contracts
described in Section 1.1(b);
(vi) All rights of Seller primarily related to the Business to
utility, security and other deposits made by Seller and any prepaid
expenses
paid by Seller to third parties, but only to the extent reflected
on the Closing
Working Capital Statement;
(vii) All information (other than Intellectual Property) and
records (whether in tangible or electronic form) primarily related
to the
operations of the Business, including (A) supplier lists and
records (supplier
financial information to the extent permitted pursuant to the
confidentiality
provisions in the Assigned Contracts), (B) manufacturing research
and
development reports and records, (C) production reports and
records, (D) service
and warranty records, equipment logs, operating guides and manuals
directly
relating to the Equipment at the Facilities, (E) financial and
accounting
records (other than with respect to third-party customers), (F)
studies,
reports, correspondence and other similar documents and records,
(G) copies of
all of the foregoing information and records (except as excluded
above or in
Section 1.1(b)) and (H) copies of all personnel records related (to
the extent
permitted by the relevant written consent) to the Business (and not
the
originals thereof) for each Hired Employee that executes an
appropriate written
consent for the relevant records in the form attached hereto as
Exhibit H or
Exhibit M; provided, however, that the Assets shall not include the
records
described in Section 1.1(b)(xxiii), personnel records for non-Hired
Employees,
corporate charter, all documents subject to the attorney-client
privilege, Tax
Returns filed by Seller and books and
2
<PAGE>
records of Seller relating thereto, taxpayer and other
identification numbers,
records, seals, minute books, stock transfer books used, and all
other assets
primarily used, in connection with the corporate functions of
Seller; provided,
further, that in no case shall any Boeing proprietary information
made available
to Buyer for its use under the BCA Intellectual Property License
Agreement, the
BCA Supply Agreement or the IDS Supply Agreement be included
hereunder; and,
provided, further, that Seller has the right to redact, on or prior
to the
Closing Date, any information that is not related to the Business,
the Assets or
the Assumed Liabilities;
(viii) Assets of Seller related to Benefit Plans to the extent
provided in Section 6.2;
(ix) All goodwill associated with the Business and, to the
extent
assignable, telephone and fax numbers and listings for the 526
prefix;
(x) A 77.77% interest as a tenant in common in the Kansas
Industrial Energy Supply Company established pursuant to the
Tenants-in-Common
Management Agreement dated October 3, 1980;
(xi) Assets of Seller directly related to the electricity
transmission and distribution system used to provide electricity to
the Wichita
Facility;
(xii) [Intentionally Deleted]
(xiii) All right, title and interest of Seller in and to the
real
property set forth on Schedule 1.l(a)(xiii), including any and all
buildings,
structures and improvements located thereon and all fixtures
attached thereto,
together with all easements, rights of way, reservations,
privileges,
appurtenances and other estates and rights benefiting such real
property, held
by Seller pursuant to a lease, sublease, license or other written
occupancy
agreement (collectively, the "Leased Property");
(xiv) All rights, claims, credits, causes of action, demands,
privileges and rights of set-off of Seller against third parties
primarily
related to the Assets or to the extent related to the Assumed
Liabilities,
including claims pursuant to all warranties, representations and
guarantees made
by suppliers, manufacturers, contractors and other third parties,
but excluding
any claim against a supplier, manufacturer, contractor or third
party based on
the presence of asbestos in a component that was furnished by such
Person to the
extent relating to a liability retained by Seller pursuant to
Section
1.2(b)(xxiv) or directly relating to a liability retained by Seller
pursuant to
Section 1.2(b)(xii);
(xv) The assets described in Schedule 1.1(a)(xv);
(xvi) The Spares Inventory set forth on Schedule 1.1(a)(xvi);
and
(xvii) The assets subleased to Buyer pursuant to the terms of
the
Sublease (IRBs).
Notwithstanding the foregoing, Seller may retain copies of any
Contracts referenced in Section 1.1(a)(v) or records: (1) which
relate to
properties or activities of Seller
3
<PAGE>
other than the Business, (2) which are required to be retained
pursuant to any
Requirement of Law or are subject to the attorney-client privilege,
for
financial reporting purposes, for Tax purposes, legal defense or
prosecution
purposes or otherwise in connection with the Excluded Assets or the
Excluded
Liabilities, or (3) which are reasonably deemed necessary by
Seller.
Notwithstanding the foregoing, the transfer of the Assets pursuant
to
this Agreement shall not include the assumption of any Liability
related to the
Assets unless Buyer expressly assumes that Liability pursuant to
Sections
1.2(a), 6.13 or 9.5.
(b) Notwithstanding anything to the contrary herein, Seller shall
not
contribute, convey, assign, or transfer to Buyer, and Buyer shall
not acquire or
have any rights to acquire, any assets other than those
specifically set forth
in Section 1.1(a) (the "Excluded Assets"). Without limiting the
generality of
the foregoing, the following shall constitute Excluded Assets:
(i) All cash, cash equivalents and securities of Seller except
as
described in Section 1.1(a)(vi);
(ii) All notes, drafts and accounts receivable or other
obligations for the payment of money;
(iii) All bank and other depository accounts and safe deposit
boxes of Seller;
(iv) All refunds of Taxes and Tax loss carry forwards relating
to
any period or portion thereof ending on or prior to the Closing
Date (and any
such refunds received by Buyer shall be promptly paid over by Buyer
to Seller);
(v) All assets, whether real or personal, tangible or
intangible,
which are owned, used or held for use by Seller primarily to
conduct any
business operation or activity other than the Business including,
but not
limited to, the IDS Business and shared services support primarily
related to
the IDS Business;
(vi) Nontransferable Governmental Permits, pending applications
or renewals and those Governmental Permits, pending applications or
renewals
needed in whole or in part by Seller to continue to operate its
businesses other
than the Business, as set forth on Schedule 1.1(b)(vi) hereto;
(vii) All insurance policies of Seller related to the Business,
any refunds paid or payable in connection with the cancellation
or
discontinuance of any insurance policies applicable to the Business
and any
claims made or to be made under any such insurance policies;
(viii) [Intentionally Deleted]
(ix) All assets used primarily in connection with the corporate
functions of Seller (including but not limited to personnel
records, other than
the personnel records included as Assets pursuant to Section
l.1(a)(vii),
corporate charter, all documents
4
<PAGE>
subject to the attorney-client privilege, Tax Returns filed by
Seller and books
and records related thereto, taxpayer and other identification
numbers, records,
seals, minute books and stock transfer books);
(x) All rights of Seller under this Agreement, the Seller
Transaction Agreements and the Tentative Purchase Price and Final
Purchase
Price;
(xi) Assets of Seller related to all Benefit Plans, except as
set
forth in Section 6.2;
(xii) All Intellectual Property, including, without limitation,
the Intellectual Property that will be licensed to Buyer pursuant
to the BCA
Intellectual Property License Agreement or any other Seller
Transaction
Agreement;
(xiii) The existing collective bargaining agreements covering
the
employees of the Business;
(xiv) Any Government Furnished Equipment and any tooling owned
by
Seller provided to Buyer pursuant to the IDS Supply Agreement;
(xv) The Contracts set forth on Schedule 1.l(b)(xv) relating to
enterprise wide supply arrangements ("Excluded Supply
Contracts");
(xvi) The Contracts set forth on Schedule 1.1(b)(xvi) relating
to
leased equipment (the "Excluded Equipment Leases");
(xvii) Any domain names used in the Business;
(xviii) The Marks;
(xix) Any inventory of the Business, including, but not limited
to, all materials and supplies, all work in process, and all
finished products,
that on or prior to the Closing Date has been delivered FOB the
Facilities or is
in transit to another business unit of Seller that is not part of
the Business
(excluding the Spares Inventory set forth on Schedule
1.1(a)(xvi));
(xx) Intercompany accounts receivable between Seller and
Seller's
Affiliates;
(xxi) The tooling assets identified on Schedule 1.1(b)(xxi)
(the
"Excluded Tooling");
(xxii) the "Permit No. 234 Landfill" (also known as the "Emery
Landfill," "Boeing Landfill," and "Boeing/Emery Landfill" located
approximately
.5 miles from the Wichita Facility;
(xxiii) All records relating primarily to Excluded Assets and
Excluded Liabilities, including any such records primarily related
to
environmental Liabilities retained by
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Seller, provided, Buyer shall be entitled to copies of certain such
records as
described in Section 11.5(b);
(xxiv) Except to the extent provided in Section l.1(a)(xiv),
all
rights, claims, credits, causes of action or rights of set-off of
Seller against
third parties, including causes of action, claims and rights under
insurance
policies relating thereto;
(xxv) The assets used by the shared services support included
in
the Business but set forth on Schedule 1.1(b)(xxv);
(xxvi) In addition to the Excluded Assets described in Section
1.1(b)(v) above, the Excluded Assets shall also include the assets
of the IDS
Business set forth on Schedule 1.1(b)(xxvi);
(xxvii) A 1.42% interest as a tenant in common in the Kansas
Industrial Energy Supply Company established pursuant to the
Tenants-in-Common
Management Agreement dated October 3, 1980; and
(xxviii) Any assets (including any current assets) not
otherwise
treated as Excluded Assets and that relate to Taxes collected or
withheld by
Seller and payable to any Governmental Authority.
(c) In addition to the Excluded Assets described in Section
1.1(b)
above, for the avoidance of doubt, the Excluded Assets shall also
include the
assets primarily used by the IDS Wichita Development and
Modification Center
facilities located in Wichita, Kansas.
(d) In addition to the Excluded Assets described in Sections
1.1(b)
and (c) above, the Excluded Assets shall also include those set
forth on
Schedule 1.1(d).
1.2 Assumption of Liabilities.
(a) Upon the terms and subject to the conditions set forth herein,
at
the Closing Buyer shall assume from Seller (and thereafter pay,
perform,
discharge or otherwise satisfy in accordance with their respective
terms), and
Seller shall irrevocably convey, transfer and assign to Buyer, only
the
following Liabilities of Seller (the "Assumed Liabilities"):
(i) Liabilities of Seller reflected on the Closing Working
Capital Statement finally determined in accordance with Section
1.6;
(ii) Liabilities arising after the Closing under the Assigned
Contracts (other than Liabilities arising out of or relating to any
act or
omission that occurred prior to the Closing);
(iii) Liabilities of Seller arising after the Closing under any
Assigned Contract included in the Assets that is entered into by
Seller after
the date hereof in accordance with the provisions of this Agreement
(other than
Liabilities to the extent arising out of or relating to any act or
omission that
occurred prior to the Closing);
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(iv) Liabilities for pension Liability, Accrued Vacation,
retiree
medical, flexible spending accounts, sick leave, and personal time,
to the
extent provided in Section 6.2.
(v) Warranty obligations and claims and associated costs and
damages arising from products (or component parts thereof)
delivered after the
Closing Date;
(vi) Liabilities arising from the defective manufacture of
products (or component parts thereof) delivered after the Closing
Date, whether
manufactured or repaired before, on or after the Closing Date;
(vii)
Liabilities arising from defects in a product specification
and/or design defects in products (or component parts thereof)
delivered after
the Closing Date, but not including any design defects with regard
to items
designated with an engineering delegation level of 3 or below on
Attachment 4 to
the Special Business Provisions (Sustaining), the Special Business
Provisions
(787) or the Special Business Provisions (Spares);
(viii) Liabilities of Seller described in Schedule
1.2(a)(viii);
and
(ix) Liabilities arising out of exposure to asbestos, as
follows:
(A) With respect to exposure to asbestos in a product (or
component part thereof), Buyer shall assume such Liabilities to
the extent that the product was manufactured or produced after
the Closing Date; and
(B) With respect to exposure to asbestos in a Facility,
Buyer shall assume such Liabilities to the extent that the
exposure to asbestos occurred after the Closing Date. This
Section 1.2(a)(ix) shall not apply to claims for exposure to
asbestos asserted under workers compensation Laws.
(b) Buyer shall not assume any Liabilities other than the
"Assumed
Liabilities." All Liabilities of Seller other than the Assumed
Liabilities (the
"Excluded Liabilities") shall remain the sole responsibility of and
shall be
retained, paid, performed and discharged solely by Seller. Without
limiting the
generality of the foregoing, "Excluded Liabilities" shall include,
without
limitation:
(i) Liabilities for Income Taxes of Seller;
(ii) Liabilities of Seller in respect of transaction costs
payable by it pursuant to Section 11.10 hereof or otherwise;
(iii) Liabilities of Seller not arising out of or related to
the
Business or the Assets;
(iv) Liabilities of Seller related to all Benefit Plans, except
as set forth in Section 6.2;
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(v) Liabilities of Seller to employees of the Business who are
not hired by Buyer immediately following the Closing Date, except
as provided in
Section 9.2(a)(v);
(vi) Liabilities of Seller arising under any Environmental Law
relating to conditions existing on or prior to the Closing Date
with respect to
Seller's Facilities or to properties formerly owned, operated or
used by Seller
or the Business and Liabilities relating to properties to which
Seller or the
Business have sent waste, on or prior to the Closing Date, for
treatment,
storage or disposal, except as set forth in Sections 6.13 and
9.5;
(vii) Liabilities for amounts of Taxes collected or withheld by
Seller and payable to any Governmental Authority;
(viii) Warranty obligations and claims and associated costs and
damages arising from products (or component parts thereof) shipped
FOB the
Facilities or otherwise on or prior to the Closing Date;
(ix) Liabilities arising from the defective manufacture of
products (or component parts thereof) shipped FOB the Facilities or
otherwise on
or prior to the Closing Date;
(x) Liabilities arising from defects in a product specification
and/or design defects in products (or component parts thereof)
shipped FOB the
Facilities or otherwise on or prior to the Closing Date;
(xi) Liabilities arising from design defects in products (or
component parts thereof), but only with regard to items designated
with an
engineering delegation level of 3 or below on Attachment 4 to the
Special
Business Provisions (Sustaining), the Special Business Provisions
(787) or the
Special Business Provisions (Spares);
(xii) Liabilities under Assigned Contracts assumed by Buyer
pursuant to Section 1.2(a) that arise after the Closing to the
extent arising
out of or relating to any act or omission that occurred prior to
the Closing;
(xiii) Liabilities under any Contract not assumed by Buyer
under
Section 1.2(a), including Liabilities arising out of or relating to
Seller's
credit facilities or any security interest related thereto;
(xiv) Liabilities of the Business to Seller or to any Affiliate
of Seller;
(xv) Liabilities of Seller under any easement, access agreement
or other document or instrument recorded against or affecting the
Facilities or
any portion thereof, to the extent arising or relating to the
period of time
prior to Closing;
(xvi) Liabilities to indemnify, reimburse or advance amounts to
any officer, director, employee or agent of Seller or any officer,
employee or
agent of the Business;
(xvii) Liabilities to the extent covered by insurance policies
of
Seller in effect prior to the Closing;
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(xviii) Liabilities arising out of any Proceeding pending as of
the Closing, except for Liabilities to the extent such Liabilities
relate to any
act or omission of Buyer after the Closing Date;
(xix) Liabilities arising out of any Proceeding commenced after
the Closing to the extent arising out of or relating to any act or
omission
occurring on or prior to the Closing Date;
(xx) Liabilities related to Seller's use of Intellectual
Property
on or prior to the Closing Date;
(xxi) Liabilities to the extent arising out of or resulting
from
Seller's compliance or noncompliance with any Requirement of Law or
Court Order
or order of any Governmental Authority;
(xxii) Liabilities of Seller under this Agreement or any Seller
Transaction Agreement;
(xxiii) Liabilities of Seller based upon Seller's acts or
omissions occurring after the Closing; and
(xxiv) Liabilities arising out of exposure to asbestos, as
follows:
(A) With respect to exposure to asbestos in a product (or
component part thereof), Seller shall retain such Liabilities
to
the extent that the product was manufactured or produced on or
prior to the Closing Date; and
(B) With respect to exposure to asbestos in a Facility,
Seller shall retain such Liabilities to the extent that the
exposure to asbestos occurred on or prior to the Closing Date.
This Section 1.2(b)(xxiv) shall not apply to claims for
exposure
to asbestos under workers compensation Laws.
1.3 Determination of Final Purchase Price.
(a) The amount to be paid by Buyer to Seller for the Assets
(the
"Final Purchase Price") shall be the Tentative Purchase Price as
defined and
determined in Section 1.3(c) below, as the Tentative Purchase Price
may be
adjusted after the Closing pursuant to the provisions of Section
1.5(a) and
Section 1.6 below. The Final Purchase Price shall be paid in
accordance with the
provisions of Section 1.7 below.
(b) Not later than thirty (30) calendar days prior to the
Closing,
Seller will deliver to Buyer (i) an estimate of the Closing Net
Working Capital,
which estimate shall be the Net Working Capital of the Business as
of the end of
the most recent accounting month for which internal financial
statements are
available (the "Estimated Closing Net Working Capital") and (ii) an
estimate of
the book value of the capital assets acquired for the 787 program
as
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<PAGE>
contemplated by the capital plan in the Memorandum of Agreement
(787), without
regard to time period (the "787 Assets") as of the Closing Date
(the "Estimated
787 Book Value").
(c) The Final Purchase Price shall be calculated with reference to
an
amount determined on or before the Closing Date in accordance with
this Section
1.3 (the "Tentative Purchase Price"). The Tentative Purchase Price
shall be the
sum of (x) the book value of the Assets as reflected on the Audited
Interim
Financial Statements (reduced by the amount of capitalized interest
reflected
therein) including an unaudited value of Spares Inventory as of
February 17,
2005 as set forth on a schedule attached to the Audited Interim
Financial
Statements plus (y) One Hundred Ninety-Two Million Four Hundred
Thousand Dollars
($192,400,000), as adjusted as follows:
(i) If the Estimated Closing Net Working Capital is greater
than
or less than the Target Net Working Capital Amount, the Tentative
Purchase Price
shall be increased by such excess or decreased by such shortfall,
as applicable.
(ii) The Tentative Purchase Price shall be increased by the
amount of the Estimated 787 Book Value, less the aggregate book
value of the 787
Assets as reflected on the Audited Interim Financial
Statements.
(d) In order to determine the Final Purchase Price, the
Tentative
Purchase Price shall be adjusted after the Closing pursuant to the
provisions of
Section 1.5(a) and Section 1.6 below.
(e) For purposes of the adjustments to the Tentative Purchase
Price
and Final Purchase Price provided in this Section 1.3 and Section
1.5(a) and
Section 1.6 below, and also for purposes of determining the amount
by which the
Tentative Purchase Price and Final Purchase Price shall be
considered to have
been paid in accordance with Section 1.7 below by way of assumption
by the Buyer
of Accrued Vacation Liability, Accrued Vacation Liability and any
estimates
thereof shall be included as the amount determined multiplied by
1.0765 in order
to reflect the payroll taxes related thereto.
1.4 Allocation of Final Purchase Price.
(a) The consideration for the Assets provided herein shall be
allocated among the various categories of Assets for Tax purposes
in accordance
with U.S. Treasury Regulations Sections 1.1060-1(a)(1) and
1.338-6(b) pursuant
to a schedule prepared in accordance with the provisions of Section
1.4(b) (as
finalized pursuant to Section 1.4(b) and, to the extent applicable,
Section
1.4(c), the "Allocation Schedule"). Buyer and Seller shall execute
and file all
federal, state, local and foreign Tax Returns in accordance with
the Allocation
Schedule (with appropriate changes, if necessary, in the case of
Tax Returns
other than United States federal Income Tax Returns) and shall not
take any
position with respect to Taxes before any Governmental Authority or
in any
judicial Proceeding that is inconsistent with such allocation,
except as
otherwise required pursuant to (i) Court Order (including for this
purpose an
arbitration award only if it is described in clause (ii) or (iii)
of this
sentence), (ii) a determination of a Tax Arbitrator pursuant to an
arbitration
conducted in accordance with Section 1.4(c) below that a Tax Return
preparer for
Seller or Buyer would be subject to penalty under Section 6694 of
the
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Code as a result of signing a Tax Return based on such allocation,
or (iii) a
final "determination" (as that term is defined in Section 1313(a)
of the Code)
or similar determination pursuant to state, local or foreign Tax
law. Buyer and
Seller shall each timely file a Form 8594 with the IRS in
accordance with the
requirements of Section 1060 of the Code.
(b) Within ninety (90) days after the Closing Date, Buyer shall
draft
and provide to Seller a draft Allocation Schedule in which the
consideration for
the Assets as determined for federal income Tax purposes ("Tax
Purchase Price")
shall be allocated solely to Assets and among the categories
thereof in
accordance with U.S. Treasury Regulations Sections 1.1060-1(a)(1)
and 1.338-6(b)
and the provisions of this Section 1.4. Such draft Allocation
Schedule shall be
prepared by Buyer so as to make such allocation based upon their
net book value
as reflected on the books of Seller maintained for financial
reporting purposes
and as adjusted through the date of Closing, unless (i) otherwise
agreed by
Seller and Buyer, or (ii) required as the result of a determination
by an
independent third party appraiser (after giving Seller and Buyer
the opportunity
to provide such data and information as they believe pertinent
thereto) in
connection with the preparation of the Allocation Schedule that
such net book
value cannot reasonably be considered to represent fair market
value of the
applicable Assets. Unless Seller shall, within ten (10) days after
receipt of
such draft Allocation Schedule, give notice to Buyer of its
objection to the
draft Allocation Schedule, which objection shall not be
unreasonable, the draft
Allocation Schedule shall become the final Allocation Schedule.
(c) Any disagreement regarding the allocation contained in the
draft
Allocation Schedule prepared by Buyer pursuant to Section 1.4(b),
whether
arising as contemplated pursuant to Section 1.4(b) or thereafter in
connection
with the filing of any Tax Return or any Proceeding related to
Taxes, shall be
submitted for final and binding resolution to a Tax partner at the
Neutral
Accounting Firm to resolve such disagreements (the "Tax
Arbitrator"). Buyer and
Seller shall instruct the Tax Arbitrator to choose either the
allocation
schedule proposed by Buyer or the allocation schedule proposed by
Seller and to
deliver to Buyer and Seller, as promptly as practicable and in any
event within
ninety (90) calendar days after his or her appointment, a written
report setting
forth the resolution of any such disagreement determined in
accordance with this
Section 1.4. The determination of the Tax Arbitrator shall be final
and binding
upon Buyer and Seller. The fees, expenses and costs of the Tax
Arbitrator shall
be borne one hundred percent (100%) by the party whose position is
rejected by
the Tax Arbitrator. Other than such fees and expenses of the Tax
Arbitrator,
Buyer and Seller shall each be responsible for their own costs and
expenses
incurred in connection with any actions taken pursuant to this
Section 1.4.
1.5 Allocation of Expenses. On the Closing Date, the following
expenses attributable to the Business shall be allocated between
and are hereby
assumed by Buyer on the one hand and Seller on the other hand as
follows:
(a) Taxes, Utilities, and Prepaid Expenses. All state, county
and
local ad valorem Taxes on real or personal property shall be
apportioned between
Buyer and Seller as of 11:59 p.m. (Central Time) on the Closing
Date, computed
on the basis of the fiscal year for which the same are levied. All
utility
charges, gas charges, electric charges, water charges, water rents
and sewer
rents, if any, shall be apportioned between Buyer and Seller as of
11:59 p.m.
(Central Time) on the Closing Date, to the extent feasible, based
upon a meter
reading, and to the
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extent not feasible, based upon a fraction, the numerator of which
is the number
of days in the period for which such charges or rents are imposed,
ending on and
including the Closing Date (as to Seller's allocation), and the
denominator of
which is the total number of days in such period, with Buyer being
responsible
for the balance. All prepaid expenses paid by Seller on or prior to
the Closing
Date in respect of the Business (other than in respect of Taxes)
shall be
apportioned between Buyer and Seller as of 11:59 p.m. (Central
Time) on the
Closing Date computed on the basis of the benefit received by
Seller on or prior
to the Closing Date and the benefit to be received by Buyer
subsequent to the
Closing Date with respect to any Contract or other matter to which
the prepaid
expense relates. All prorations shall be made insofar as feasible
on the Closing
Date, except to such extent such prorations are reflected in the
Estimated
Closing Net Working Capital. During the ninety (90) day period
subsequent to the
Closing Date, Seller shall advise Buyer and Buyer shall advise
Seller of any
actual changes to such prorations, and such changes shall be taken
into account
in calculation of the Final Purchase Price as an increase or
decrease, as
applicable, at the end of such ninety (90) day period. In the event
Buyer or
Seller shall receive bills either (i) after the Closing Date for
expenses
incurred on or prior to the Closing Date that were not prorated in
accordance
with this Section 1.5(a), or (ii) more than ninety (90) days after
the Closing
Date that were not prorated and taken into account in the
calculation of the
Final Purchase Price, then, in either such case, Buyer or Seller,
as the case
may be, shall promptly notify the other party in writing as to the
amount of the
expense subject to proration and the responsible party shall
promptly pay its
portion of such expense (or, in the event such expense has been
paid on behalf
of the responsible party, reimburse the other party for its portion
of such
expense), and such expense shall not be taken into account in the
calculation of
either the Tentative Purchase Price or the Final Purchase
Price.
(b) Transfer Taxes. Buyer and Seller shall cooperate in
preparing,
executing and filing use, sales, real estate, transfer and similar
Tax Returns
relating to the purchase and sale of the Assets. Buyer shall be
responsible for
and shall duly and timely pay, or within five (5) Business Days
after demand
therefor shall reimburse Seller for any payment by Seller of, all
transfer
Taxes, including any penalties, interest and additions to Tax
relating to such
transfer Taxes, incurred in connection with the purchase and sale
of the Assets,
regardless of (i) when such transfer Taxes and such other amounts
may be
assessed or levied or action otherwise taken to collect such
transfer Taxes,
(ii) whether the incidence or responsibility for such transfer
Taxes and such
other amounts (as determined without regard hereto) may fall upon
Seller or
Buyer, and (iii) whether such transfer Taxes and such other amounts
may be
assessed, levied or otherwise collected from Seller or Buyer;
provided, however,
Seller shall bear (x) one half (1/2) of transfer Taxes to the
extent such
transfer Taxes are applied to amounts not greater than the net book
value of the
applicable Assets as carried on the books of Seller as adjusted
through the date
of Closing and (y) one half (1/2) of transfer Taxes (but not more
than one
hundred and fifty thousand dollars ($150,000)) to the extent such
transfer Taxes
are applied to amounts greater than the net book value of the
applicable Assets
as carried on the books of Seller as adjusted through the date of
Closing. Such
Tax Returns shall be prepared in a manner that is consistent with
the
determination of the aggregate fair market value of the Assets by
the classes
contemplated by Section 1.4.
(c) Tax Prosecution
Rights. Notwithstanding anything contained herein
to the contrary other than Section 9.4(b) to the extent provided in
Section
9.4(c) hereof, Seller shall have the right (at its own expense) to
prosecute and
continue to prosecute, and to control the
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conduct of, any Tax audit or examination and any administrative
appeal or
litigation relating thereto, or any other Tax Proceeding, to the
extent it
relates to any Taxes with respect to which Seller is obligated
hereunder to
indemnify the Buyer Group Members; and Seller shall have the right
to determine
whether and to what extent to extend or waive any statute of
limitations for the
assessment of any Tax with respect to which the Seller is obligated
hereunder to
indemnify the Buyer Group Members; provided, however, without the
consent of
Buyer (which consent shall not be unreasonably withheld or
delayed), Seller
shall not settle any such audit, examination, appeal, litigation or
Proceeding
to the extent that Liability of the Buyer for Taxes of the type
that are the
subject of the settlement for any period or portion thereof after
Closing would
reasonably be expected to be increased as a result of the
settlement (provided
further, the obligation of Seller to obtain such consent of Buyer
shall be
subject to the execution by Buyer of a confidentiality agreement
setting forth
reasonable terms pursuant to which Buyer will maintain the
confidentiality of
any information provided by Seller to Buyer in connection with such
consent or
the matters to which it relates). Any refunds obtained for such
claims for any
Tax years prior to the Tax year in which the Closing occurs and the
pro rata
portion of any refunds obtained for such claims for the Tax year in
which the
Closing occurs, net of the expenses incurred in obtaining such
refunds, shall be
paid to Seller.
1.6 Purchase Price Adjustment; Determination of Final Purchase
Price.
(a) Within ninety (90) calendar days after the Closing Date,
Seller
shall prepare and deliver to Buyer:
(i) a statement setting forth the Closing Net Working Capital
(such statement, the "Closing Working Capital Statement");
(ii) a statement setting forth the actual book value of the 787
Assets (the "Actual 787 Book Value") as of the Closing Date (the
"Actual 787
Book Value Statement"); and
(iii) a statement setting forth:
(A) the number of employees of the Wichita Division - Boeing
Commercial Airplanes on the Closing Date (the "Number of
Employees"), and
(B) the Number of Employees that both (i) did not receive
offers of employment from Buyer and (ii) are entitled to
receive
severance under Seller's severance plans or policies in effect
as
of the date hereof as a result of the transactions contemplated
by this Agreement and who have either received or have begun to
receive such severance payments
(the "Severance Statement") and, together with the Closing
Working Capital Statement and the Actual 787 Book Value Statement,
the "Purchase
Price Adjustment Statements").
(b) Buyer shall cooperate with Seller in connection with, and
shall
furnish to Seller all such information as Seller may reasonably
require, in the
preparation of the Purchase
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<PAGE>
Price Adjustment Statements. Buyer shall provide to Seller in
writing promptly
after offers of employment are made, the Number of Employees that
received
offers of employment from Buyer and a listing of the names of each
such
employee. Except as set forth on Schedule 1.6(b), the Purchase
Price Adjustment
Statements will be prepared using the same accounting methods,
policies,
practices and procedures, with consistent classifications and
estimation
methodologies as were used in the preparation of the Target Net
Working Capital
Amount, the Estimated Closing Net Working Capital Amount and the
Estimated 787
Book Value, to the extent applicable, and will not include any
changes in assets
or Liabilities as a result of purchase accounting adjustments
arising from or
resulting as a consequence of the transactions contemplated hereby
or subsequent
changes in accounting policy or procedure. In the event that the
Closing Date
does not occur at a financial week or month end for accounting
purposes, the
parties shall agree on mutually acceptable roll forward or roll
back procedures.
Buyer shall make its employees available to assist Seller in the
preparation of
the Purchase Price Adjustment Statements.
(c) Each party shall provide the other party and its
representatives
with reasonable access to books and records and relevant personnel
during the
preparation of the Purchase Price Adjustment Statements and the
resolution of
any disputes that may arise under this Section 1.6 and Section
1.7.
(d) If Buyer disagrees with the determination of the Closing
Net
Working Capital as shown on the Closing Working Capital Statement,
the Actual
787 Book Value as shown on the Actual 787 Book Value Statement, the
information
shown on the Severance Statement or the determination of the
Purchase Price
Differential, Buyer shall notify Seller in writing of such
disagreement within
sixty (60) calendar days after delivery of the applicable Purchase
Price
Adjustment Statement, which notice shall describe the nature of any
such
disagreement in reasonable detail, identify the specific items
involved and the
dollar amount of each such disagreement and provide reasonable
supporting
documentation for each such disagreement. After the end of such
sixty (60)
calendar day period, neither Buyer nor Seller may introduce
additional
disagreements with respect to any item in the applicable Purchase
Price
Adjustment Statement or increase the amount of any disagreement,
and any item
not so identified shall be deemed to be agreed to by Buyer and
Seller and will
be final and binding upon the parties. During the sixty (60)
calendar day period
of its review, Buyer shall have reasonable access to any documents,
schedules or
work papers used in the preparation of the Purchase Price
Adjustment Statements.
(e) Buyer and Seller agree to negotiate in good faith to resolve
any
such disagreement. If Buyer and Seller are unable to resolve all
disagreements
properly identified by Buyer pursuant to Section 1.6(d) within
thirty (30)
calendar days after delivery to Seller of written notice of such
disagreement,
then such disagreements may be submitted by either party for final
and binding
resolution to the Neutral Accounting Firm to resolve such
disagreements (the
"Accounting Arbitrator"). The Accounting Arbitrator will only
consider those
items and amounts set forth in a Purchase Price Adjustment
Statement as to which
Buyer and Seller have disagreed within the time periods and on the
terms
specified above and must resolve the matter in accordance with the
terms and
provisions of this Agreement. The Accounting Arbitrator shall
deliver to Buyer
and Seller, as promptly as practicable and in any event within
ninety (90)
calendar days after its appointment, a written report setting forth
the
resolution of any such
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<PAGE>
disagreement determined in accordance with the terms of this
Agreement. The
Accounting Arbitrator shall select as a resolution the position of
either Buyer
or Seller for each item of disagreement and may not impose an
alternative
resolution. The Accounting Arbitrator shall make its determination
based solely
on presentations and supporting material provided by the parties
and not
pursuant to any independent review. The determination of the
Accounting
Arbitrator shall be final and binding upon Buyer and Seller. The
fees, expenses
and costs of the Accounting Arbitrator shall be borne one hundred
percent (100%)
by the party whose aggregate position was furthest from the
aggregate final
determination of the Accounting Arbitrator. Other than such fees
and expenses of
the Accounting Arbitrator, Buyer and Seller shall each be
responsible for their
own costs and expenses incurred in connection with any actions
taken pursuant to
Section 1.6.
(f) Except as set forth on Schedule 1.6(b), the parties hereto
agree
that the procedure set forth herein with respect to the Purchase
Price
Adjustment Statements, and the purchase price adjustment provided
herein and in
Section 1.7, are not intended to permit the introduction of
different accounting
methods, policies, practices, procedures, classifications or
estimation
methodologies for purposes of determining the asset and Liability
balances from
those used in the preparation of the Audited Financial
Statements.
(g) If after the Closing Date, Seller pays any Liability on the
Closing Working Capital Statement, then Buyer and Seller agree that
such
Liability shall to the extent of such payment be deemed removed
from the Closing
Working Capital Statement if such payment is made prior to the date
on which the
Closing Working Capital Statement is delivered, or if after such
date, Buyer
shall promptly reimburse Seller for the amount of such payment if
Buyer did not
make payment before receiving written notice from Seller of
Seller's payment.
(h) The Tentative Purchase Price shall be subjected to the
following
adjustments and, as so adjusted, shall be the Final Purchase
Price:
(i) If the Closing Net Working Capital as finally determined in
accordance with this Section 1.6 is less than the Estimated Closing
Net Working
Capital, the Tentative Purchase Price shall be decreased on a
dollar-for-dollar
basis by the amount of such shortfall, and if the Closing Net
Working Capital is
greater than the Estimated Closing Net Working Capital, the
Tentative Purchase
Price shall be increased on a dollar-for-dollar basis by the amount
of such
excess.
(ii) If the Actual 787 Book Value as finally determined in
accordance with this Section 1.6 is less than the Estimated 787
Book Value, the
Tentative Purchase Price shall be decreased on a dollar-for-dollar
basis by the
amount of such shortfall, and if the Actual 787 Book Value is
greater than the
Estimated 787 Book Value, the Tentative Purchase Price shall be
increased on a
dollar-for-dollar basis by the amount of such excess.
(iii) If the sum of (A) the Number of Employees referred to in
Section 1.6(a)(iii)(B) plus (B) Factor A is greater than ten
percent of the sum
of (C) the Number of Employees plus (D) Factor B, the Tentative
Purchase Price
shall be increased by an amount determined pursuant to the
following formula:
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<PAGE>
((A/B) - .1000) x 100) x $2,000,000
Where "A" represents the sum of (A) the Number of Employees
referred to in Section 1.6(a)(iii)(B) plus (B) Factor A and "B"
represents the
sum of (C) the Number of Employees plus (D) Factor B.
If the Final Purchase Price is less than or greater than the
Tentative Purchase
Price, the amount of such difference (the "Purchase Price
Differential") shall
be paid as provided in Section 1.7.
(i) As an additional adjustment to the purchase price for the
Assets
(but not to be taken into account in the calculation of the
Tentative Purchase
Price or Final Purchase Price nor considered in connection with
payment thereof
under Section 1.7), within thirty (30) days after filing its Kansas
Corporation
Income Tax Return on Kansas Department of Revenue Form K 120 (or
any successor
form) for each taxable year of Seller ended after the Closing Date
during which
any Industrial Revenue Bond remains outstanding in the hands of
Seller, Seller
shall pay to Buyer an amount equal to one-half (1/2) of the
reduction in Kansas
corporate Income Tax actually payable by Seller pursuant to such
Kansas
Corporation Income Tax Return (including a refund of such Tax)
solely to the
extent attributable to exemption of interest on the Industrial
Revenue Bonds
from gross income for purposes of Kansas corporate Income Taxation
(calculated
by comparing the amount of such Tax imposed upon or refundable to
Seller
pursuant to such Kansas Corporation Income Tax Return with the
amount of such
Tax that would be so imposed or refundable if such interest were
not so
excludible); provided, however, for the taxable year of Seller
during which the
Closing occurs, the amount Seller is required to pay to Buyer under
this Section
1.6(i) shall be one half (1/2) of the amount equal to the product
of (i) such
tax reduction for the entire taxable year in which the Closing Date
occurs
multiplied by (ii) a fraction, the numerator of which is the amount
of interest
income accrued on Industrial Revenue Bonds during such post-Closing
Date portion
of such taxable year and the denominator of which is the total
amount of
interest income accrued on Industrial Revenue Bonds during all of
such taxable
year. In the event of any final determination for any reason that
any such
interest is not so excludible from gross income of Seller, the
Buyer shall repay
to Seller the amount of any payment made by Seller to Buyer
pursuant to this
Section 1.6(i) based upon excludability of such interest from gross
income of
Seller for Kansas corporate Income Tax purposes within thirty (30)
days after
notice by Seller to Buyer of such determination and the amount of
repayment
required by this sentence. Any payment or repayment pursuant to
this Section
1.6(i) shall be treated as an adjustment to purchase price for
federal and state
Income Tax purposes to the extent required or permitted by
applicable Law
regarding Taxes imposed on income.
(j) For purposes of eliminating doubt, the parties acknowledge
that,
by virtue of the definitions of Assets, Excluded Assets, Assumed
Liabilities,
and Excluded Liabilities, in the calculation of Closing Net Working
Capital and
Actual 787 Book Value, (i) there shall not be taken into account as
assets any
Assets that relate to Taxes collected or withheld by Seller and
payable to any
Governmental Authority and (ii) there shall not be taken into
account as
Liabilities any accrued and unpaid Taxes related to the Business
for which
Seller is responsible under this Agreement.
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<PAGE>
1.7 Payment of Purchase Price at Closing; Adjustment for
Overpayment
or Underpayment of Purchase Price. Payment shall be made with
respect to the
Tentative Purchase Price and Final Purchase Price as follows:
(a) At the Closing, Buyer shall pay to Seller, by means of a
wire
transfer of immediately available U.S. funds to one or more
accounts designated
in writing by Seller to Buyer at least four (4) days prior to the
Closing Date,
an amount equal to the Tentative Purchase Price less each of the
following:
(i) the amount of the Liabilities of the Business reflected in
the Audited Interim Financial Statements, excluding pension
Liabilities, retiree
medical Liabilities and Accrued Sick Leave (the "Estimated
Adjusted
Liabilities"); and
(ii) Two Hundred and Forty-Three Million Dollars ($243,000,000)
as an agreed credit against the cash payment of Tentative Purchase
Price
relating to the treatment of pension Liabilities, retiree medical
Liabilities
and Accrued Sick Leave pursuant to Section 6.2 below.
(b) Buyer and Seller hereby agree that there will be no adjustment
to
the Tentative Purchase Price, the Final Purchase Price, or the
payment thereof,
for the actual amount of pension Liabilities, retiree medical
Liabilities or
Accrued Sick Leave Liability as of the Closing Date. Subsequent to
Closing, the
provisions of Section 1.6 and this Section 1.7 shall be applied
consistently
with the immediately preceding sentence.
(c) The Purchase Price Differential shall be paid (i) by Buyer
to
Seller if the Final Purchase Price is greater than the Tentative
Purchase Price,
or (ii) by Seller to Buyer if the Final Purchase Price is less than
the
Tentative Purchase Price, by means of a wire transfer of
immediately available
U.S. funds to one or more accounts designated in writing by the
party to be paid
within five (5) Business Days after determination of the amount of
the Purchase
Price Differential in accordance with Section 1.6 hereof (or, if
later, within
four (4) days after such designation of one or more accounts) in an
amount equal
to the Purchase Price Differential, plus interest on the amount of
the Purchase
Price Differential from the Closing Date to the date of such
payment thereof at
the per annum rate equal to the rate announced by Citibank, N.A. in
the City of
New York as its base rate in effect on the Closing Date.
SECTION 2 CLOSING
2.1 Closing Date. The Closing shall be consummated on a date and at
a
time agreed upon by Buyer and Seller, but in no event later than
the fifth
Business Day after the conditions set forth in Sections 7 and 8
have been
satisfied, at the offices of Kaye Scholer LLP, 425 Park Avenue, New
York, NY
10022, or at such other place as shall be agreed upon by Buyer and
Seller. The
time and date on which the Closing is actually held is referred to
herein as the
"Closing Date." The Closing will be deemed effective at 11:59 p.m.
(Central
Time) on the Closing Date for all transactions contemplated to be
completed at
Closing.
2.2 Buyer's Closing Date Deliveries. Subject to fulfillment or
waiver
of the conditions set forth in Section 7, at the Closing Buyer
shall deliver to
Seller all of the following:
17
<PAGE>
(a) An amount in cash equal to the Tentative Purchase Price, as
adjusted pursuant to Section 1.7(a), payable as provided in Section
1.3.
(b) The following instruments of assumption and assignment:
(i) The Assignment and Assumption Agreement, providing, among
other things, for the assignment of the Assumed Liabilities by
Seller to Buyer
and the assumption of the same by Buyer, executed by a duly
authorized officer
of Buyer;
(ii) The Assignment and Assumption of Real Property Leases,
executed by a duly authorized officer of Buyer, with respect to the
Leased
Property; and
(iii) All other instruments and certificates of assumption,
novation and release as Seller may reasonably request in order to
effectively
make Buyer responsible for all Assumed Liabilities and release
Seller therefrom
to the fullest extent permitted under applicable Law; provided,
however, that
Buyer shall use reasonable commercial efforts to assist Seller to
obtain
releases from third parties, but in no event shall Buyer be
required to pay
monies to such third parties.
(c) A copy of Buyer's certificate of incorporation certified as of
a
recent date by the Secretary of State of the State of Delaware;
(d) A certificate of good standing of Buyer issued as of a recent
date
by the Secretary of State of the State of Delaware;
(e) A certificate of the Secretary or an Assistant Secretary of
Buyer,
dated the Closing Date, in form and substance reasonably
satisfactory to Seller,
as to (i) the lack of amendments to the certificate of
incorporation of Buyer
since the date of the certificate referred to in Section 2.2(c)
above; (ii) the
bylaws of Buyer; (iii) resolutions of the Board of Directors of
Buyer
authorizing the transactions contemplated by this Agreement;
(f) The Transition Services Agreement, executed by a duly
authorized
officer of Buyer;
(g) The BCA Hardware Material Services General Terms Agreement,
executed by a duly authorized officer of Buyer;
(h) The Supplemental License Agreement (Ancillary Maintenance
Repair
and Overall - Aircraft), executed by a duly authorized officer of
Buyer;
(i) The Supplemental License Agreement (Ancillary Maintenance
Repair
and Overall - Components), executed by a duly authorized officer of
Buyer;
(j) The Supplemental License Agreement (Know-How), executed by a
duly
authorized officer of Buyer;
(k) [Intentionally Deleted]
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<PAGE>
(l) The Supplemental License Agreement (Spare Parts), executed by
a
duly authorized officer of Buyer;
(m) The IDS Supply Agreement, executed by a duly authorized officer
of
Buyer;
(n) The Site Access and Environmental Support Services
Agreement,
executed by a duly authorized officer of Buyer;
(o) Counterparts of real estate transfer Tax or documentary stamp
Tax
Returns, if required;
(p) A certified or official bank check made payable to the
appropriate
Taxing authority for the amount of transfer Tax imposed on Buyer in
accordance
with Section 1.5(b) in connection with the conveyance of the
Facilities;
(q) The certificate contemplated by Section 8.1, executed by a
duly
authorized officer of Buyer;
(r) Buyer's Legal Opinion;
(s) The Memorandum of Agreement (787), or, if in final form prior
to
the Closing Date, each of the Special Business Provisions (787) and
the General
Terms Agreement (787), executed by a duly authorized officer of
Buyer;
(t) The General Terms Agreement (Sustaining), executed by a
duly
authorized officer of Buyer;
(u) The Special Business Provisions (Sustaining), executed by a
duly
authorized officer of Buyer;
(v) The Special Business Provisions (Spares), executed by a
duly
authorized officer of Buyer;
(w) The Special Business Provisions (Tech Services), executed by
a
duly authorized officer of Buyer;
(x) The Special Business Provisions (Repair Services), executed by
a
duly authorized officer of Buyer;
(y) The Electronic Access Agreement, executed by a duly
authorized
officer of Buyer;
(z) The Administrative Agreement, executed by a duly authorized
officer of Buyer;
(aa) [Intentionally Deleted]
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<PAGE>
(bb) The Strategic Alliance Agreement, executed by a duly
authorized
officer of Buyer;
(cc) All transfer Tax Returns required to be executed and filed
by
Buyer with respect to the transfer of the Assets;
(dd) A Real Estate Sales Validation Questionnaire with respect to
the
Facilities located in Kansas;
(ee) An easement agreement in recordable form and acceptable to
Buyer
granting and conveying to Buyer an irrevocable right of access over
and across
the area delineated on the IDS Site as set forth on Schedule
2.2(ee) for
purposes of ingress to and egress from McConnell Air Force Base
(such agreement,
the "McConnell AFB Access Easement"), together with such other
easements,
rights-of-way, shared parking agreements and other agreements as
Buyer may
require for the continued use and operation of the Wichita Facility
in a manner
consistent with Seller's use thereof as of the date hereof, and so
as not to be
adversely affected in any way by the consummation of the IDS
Transaction (the
McConnell AFB Access Easement, together with any and all additional
easements
and agreements relative to the IDS Site, the "IDS Easements");
(ff) An exemption certificate which (i) is duly completed and
executed
by Buyer and contains such additional statements and information as
required to
comply fully with paragraph (c) of Kansas Administrative Regulation
92-19-25b
and (ii) states that Buyer certifies that the sale by Seller to
Buyer of those
Assets consisting of tangible personal property identified on a
schedule to such
exemption certificate (which shall include Inventory and similar
items) is
exempt from the Tax levied by the Kansas retailers' sales tax act
(A) pursuant
to Kansas Statutes Annotated Section 79-3606(m) for the reason that
such
tangible personal property will become an ingredient or component
part of
tangible personal property or services produced, manufactured or
compounded for
ultimate sale at retail within or without the state of Kansas,
and/or (B)
pursuant to Kansas Statutes Annotated Section 79-3606(n) for the
reason that
such tangible personal property will be consumed in the production,
manufacture,
processing, mining, drilling, refining or compounding of tangible
personal
property, the treating of by-products or wastes derived from any
such production
process, or the providing of services for ultimate sale at retail
within or
without the state of Kansas, and/or (C) pursuant to Kansas Statutes
Annotated
Section 79-3306(ff) for the reason that the property sold
constitutes material
handling equipment, racking systems, and other related machinery
and equipment
that is used for the handling, movement or storage of tangible
personal property
in a warehouse or distribution facility in the State of Kansas;
(gg) A resale exemption certificate issued by Buyer as a
registered
retailer under the Kansas retailers' sales tax act which (i) is
duly completed
and executed by Buyer in the form and content required by, and in
compliance
with, paragraph (e) of Kansas Administrative Regulation 92-19-25b,
and (ii)
identifies the Inventory as the tangible personal property
described in such
exemption certificate;
(hh) A valid Oklahoma Resale exemption certificate as described in
68
O.S. Sec. 1357(3) or documentation supplied by the relevant Taxing
authority
acknowledging
20
<PAGE>
(i) receipt of Buyer's application for such certificate and (ii)
Buyer's
qualification to receive such certificate;
(ii) A valid Oklahoma Manufacturing exemption certificate as
described
in 68 O.S. Sec. 1359(1) or documentation supplied by the relevant
Taxing
authority acknowledging (i) receipt of Buyer's application for such
certificate
and (ii) Buyer's qualification to receive such certificate;
(jj) All necessary Oklahoma sales Tax and manufacturing Permits
to
provide resale and manufacturing certification as described in
Sections 2.2(hh)
and (ii) and be permitted as a manufacturer or documentation
supplied by the
relevant Taxing authority acknowledging (i) receipt of Buyer's
application for
such permit and (ii) Buyer's qualification to receive such
permit;
(kk) The Parking Access Easement, executed by a duly authorized
officer of Buyer;
(ll) The Reciprocal Access Agreement, executed by a duly
authorized
officer of Buyer;
(mm) The Substation Installation and Maintenance Easement, executed
by
a duly authorized officer of Buyer;
(nn) The Boeing Site Real Estate Lease, executed by a duly
authorized
officer of Buyer;
(oo) The Buyer's Site Real Estate Lease, executed by a duly
authorized
officer of Buyer;
(pp) The Shared Parking Agreement, executed by a duly
authorized
officer of Buyer;
(qq) The Storm Water Detention and Maintenance Closing
Agreement,
executed by a duly authorized officer of Buyer;
(rr) The No-Build Easement, executed by a duly authorized officer
of
Buyer;
(ss) The Transition Real Estate Lease, executed by a duly
authorized
officer of Buyer;
(tt) The Utility Support Services Agreement, executed by a duly
authorized officer of Buyer;
(uu) The Fire and Emergency Response Services Agreement, executed
by a
duly authorized officer of Buyer;
(vv) The Real Property Right of First Refusal Agreement, executed
by a
duly authorized officer of Buyer;
21
<PAGE>
(ww) The Note Documents, executed by a duly authorized officer
of
Buyer, its Affiliates and any other relevant party as
applicable;
(xx) The Declaration of Restrictions (Boeing Industrial
District),
executed by a duly authorized officer of Buyer;
(yy) The Option to Acquire Property (Boeing Industrial
District),
executed by a duly authorized officer of Buyer;
(zz) The Sublease (IRBs), executed by a duly authorized officer
of
Buyer;
(aaa) The Declaration of Restrictive Covenant and Easement,
executed
by a duly authorized officer of Buyer; and
(bbb) The Flightline Operating Agreement, executed by a duly
authorized officer of Buyer.
2.3 Seller's Closing Date Deliveries. Subject to fulfillment or
waiver
(where permissible) of the conditions set forth in Section 8, at
the Closing
Seller shall deliver to Buyer all of the following:
(a) An original Warranty Deed in recordable form, executed by a
duly
authorized officer of Seller and acknowledged and witnessed, as
appropriate,
with respect to all parcels of Owned Property;
(b) The Assignment and Assumption of Real Property Leases, executed
by
a duly authorized officer of Seller, with respect to the Leased
Property;
(c) The Assignment and Assumption Agreement, executed by a duly
authorized officer of Seller;
(d) The Bill of Sale, executed by a duly authorized officer of
Seller;
(e) All documents, affidavits, indemnities (in respect of
title),
certificates, including without limitation, consents, estoppels
and, in
recordable form, memoranda of leases, lease terminations (as
applicable) and
assignments of leases, and other information as the Title Company
reasonably
shall require in order to issue the Title Policies in accordance
with the terms
of Section 7.7 hereof;
(f) Copies, or if related to real property, originals (in
recordable
form), of all instruments, certificates, documents and other
filings (if
applicable) necessary to release the Assets from all Encumbrances,
other than
Permitted Encumbrances;
(g) With respect to the Leases and at Seller's expense, a consent
from
each lessor, ground lessor and/or sublessor under a Lease set forth
on Schedule
7.5, in form and substance reasonably acceptable to Buyer and
without
modification to the terms and conditions of each such Lease;
22
<PAGE>
(h) A copy of the certificate of incorporation of Seller certified
by
the Secretary of State of the State of Delaware;
(i) A certificate of good standing of Seller issued as of a
recent
date by the Secretary of State of the State of Delaware;
(j) A certificate of the Secretary or an Assistant Secretary of
Seller, dated the Closing Date, in form and substance reasonably
satisfactory to
Buyer, as to (i) the lack of amendments to the certificate of
incorporation of
Seller since the date of the certificate referred to in Section
2.3(h) above;
(ii) the bylaws of Seller; and (iii) delegation resolutions of the
Board of
Directors of Seller authorizing the transactions contemplated by
this Agreement;
(k) A properly executed certificate of nonforeign status,
described
under Treasury Regulation Section 1.1445-2(b)(2);
(l) The Transition Services Agreement, executed by a duly
authorized
officer of Seller;
(m) All transfer Tax Returns required to be executed and filed
by
Seller with respect to the transfer of the Assets;
(n) A Real Estate Sales Validation Questionnaire with respect to
the
Facilities located in Kansas;
(o) The McConnell AFB Access Easement and other IDS Easements;
(p) The BCA Hardware Material Services General Terms Agreement,
executed by a duly authorized officer of Seller;
(q) The Supplemental License Agreement (Ancillary Maintenance
Repair
and Overall - Aircraft), executed by a duly authorized officer of
Seller;
(r) The Supplemental License Agreement (Ancillary Maintenance
Repair
and Overall - Components), executed by a duly authorized officer of
Seller;
(s) The Supplemental License Agreement (Know-How), executed by a
duly
authorized officer of Seller;
(t) The Supplemental License Agreement (Spare Parts), executed by
a
duly authorized officer of Seller;
(u)
The IDS Supply Agreement, executed by a duly authorized officer
of
Seller;
(v) The Site Access and Environmental Support Services
Agreement,
executed by a duly authorized officer of Seller;
23
<PAGE>
(w) A certified or official bank check made payable to the
appropriate
Taxing authority for the amount of transfer Tax imposed on Seller
in accordance
with Section 1.5(b) in connection with the conveyance of the
Facilities;
(x) The certificate contemplated by Section 7.1, executed by a
duly
authorized officer of Seller;
(y) Seller's Legal Opinion;
(z) The Memorandum of Agreement (787), or, if in final form prior
to
the Closing Date, each of the Special Business Provisions (787) and
the General
Terms Agreement (787), executed by a duly authorized officer of
Seller;
(aa) The General Terms Agreement (Sustaining), executed by a
duly
authorized officer of Seller;
(bb) The Special Business Provisions (Sustaining), executed by a
duly
authorized officer of Seller;
(cc) The Special Business Provisions (Spares), executed by a
duly
authorized officer of Seller;
(dd) The Special Business Provisions (Tech Services), executed by
a
duly authorized officer of Seller;
(ee) The Special Business Provisions (Repair Services), executed by
a
duly authorized officer of Seller;
(ff) The Electronic Access Agreement, executed by a duly
authorized
officer of Seller;
(gg)
The Administrative Agreement, executed by a duly authorized
officer of Seller;
(hh) The Declaration of Restrictive Covenant and Easement, executed
by
a duly authorized officer of Seller;
(ii) The Restrictive Covenant (KDHE), executed by a duly
authorized
officer of Seller;
(jj) The Strategic Alliance Agreement, executed by a duly
authorized
officer of Seller;
(kk) All documents necessary to consummate the IDS Transaction;
(ll) The Parking Access Easement, executed by a duly authorized
officer of Seller;
24
<PAGE>
(mm) The Reciprocal Access Agreement, executed by a duly
authorized
officer of Seller;
(nn) The Substation Installation and Maintenance Easement, executed
by
a duly authorized officer of Seller;
(oo) The Boeing Site Real Estate Lease, executed by a duly
authorized
officer of Seller;
(pp) The Buyer's Site Real Estate Lease, executed by a duly
authorized
officer of Seller;
(qq) The Shared Parking Agreement, executed by a duly
authorized
officer of Seller;
(rr) The Storm Water Detention and Maintenance Closing
Agreement,
executed by a duly authorized officer of Seller;
(ss) The No-Build Easement, executed by a duly authorized officer
of
Seller;
(tt) The Transition Real Estate Lease, executed by a duly
authorized
officer of Seller;
(uu) The Utility Support Services Agreement, executed by a duly
authorized officer of Seller;
(vv) The Fire and Emergency Response Services Agreement, executed
by a
duly authorized officer of Seller;
(ww) The Real Property Right of First Refusal Agreement, executed
by a
duly authorized officer of Seller;
(xx) The Note Documents, executed by a duly authorized officer
of
Seller and/or its Affiliates, as applicable;
(yy) The Declaration of Restrictions (Boeing Industrial
District),
executed by a duly authorized officer of Seller;
(zz)
The Option to Acquire Property (Boeing Industrial District),
executed by a duly authorized officer of Seller;
(aaa) The Sublease (IRBs), executed by a duly authorized officer
of
Seller or its Affiliate as appropriate;
(bbb) The Flightline Operating Agreement, executed by a duly
authorized officer of Seller; and
(ccc) Documents effecting the assignment, conveyance and transfer
to
Buyer of Seller's rights, title and interest in and to the Tulsa
Airport Use
Agreements.
25
<PAGE>
SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLER
Subject to the disclosures set forth in the Schedules of Seller
delivered to Buyer concurrently with the parties' execution of this
Agreement
(each of which disclosures shall clearly indicate the Section and,
if
applicable, the Subsection of this Section 3 to which it relates,
and each of
which disclosures shall also be deemed to be representations and
warranties made
by Seller to Buyer under this Section 3), Seller represents and
warrants to
Buyer as follows:
3.1 Organization and Power and Authority of Seller. Seller is a
corporation duly incorporated, validly existing and in good
standing under the
Laws of the State of Delaware. Seller has the corporate power and
corporate
authority to own or lease, use and operate the Assets and to carry
on the
Business as currently conducted. Seller is duly qualified to do
business as a
foreign corporation and is in good standing under the Laws of each
state or
other jurisdiction in which either the ownership or use of the
properties or the
nature of the activities conducted by it in connection with the
Assets or the
Business requires such qualification, except for such failures to
qualify or be
in good standing which individually or in the aggregate could not
have a
Material Adverse Effect.
3.2 Authority of Seller; Conflicts.
(a) Seller has the corporate power and corporate authority to
execute,
deliver and perform this Agreement and the Seller Transaction
Agreements. The
execution, delivery and performance of this Agreement and the
Seller Transaction
Agreements by Seller has been duly authorized and approved by all
necessary
corporate action. This Agreement has been duly authorized, executed
and
delivered by Seller and (assuming the valid authorization,
execution and
delivery of this Agreement by Buyer) is the legal, valid and
binding obligation
of Seller enforceable in accordance with its terms, and each Seller
Transaction
Agreement has been duly authorized by Seller and upon execution and
delivery by
Seller will be (assuming the valid authorization, execution and
delivery by each
other party thereto) the legal, valid and binding obligation of
Seller
enforceable in accordance with its terms, in each case subject to
bankruptcy,
insolvency, reorganization, moratorium and similar Laws of general
application
relating to or affecting creditors' rights and to general equity
principles.
(b) Except as set forth in Schedule 3.2(b), the execution and
delivery
by Seller of this Agreement and each Seller Transaction Agreement,
and the
performance by it of its obligations hereunder or thereunder, do
not and will
not:
(i) violate any provision of the certificate of incorporation
or
bylaws of Seller;
(ii) (A) violate any provision of applicable Law relating to
Seller; (B) violate any provision of any order, arbitration award,
judgment or
decree to which Seller is subject; or (C) except as required under
the HSR Act,
ITAR or the Exon-Florio Amendment, require a registration, filing,
application,
notice, consent, approval, order, qualification or waiver with, to
or from any
Governmental Authority, except in any case under this clause, any
violation,
breach, default or non-compliance that would not individually or in
the
aggregate be reasonably likely to have a Material Adverse Effect;
or
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(iii) (A) require a consent, approval or waiver from, or notice
to, any party to an Assigned Contract, or (B) result in a breach
of, cause a
default under, give rise to a right of cancellation or termination
under or
result in acceleration of any obligation or loss of any benefit
under, any
Assigned Contract.
3.3 Financial Statements.
(a) Schedule 3.3(a) sets forth (i) an unaudited statement of assets
to
be acquired and liabilities to be assumed of the Business as of
December 31,
2001, 2002 and 2003, and the related statement of products shipped
and operating
expenses of the Business for the fiscal years then ended (the
"Unaudited Annual
Financial Statements") and (ii) an unaudited statement of assets to
be acquired
and liabilities to be assumed of the Business as of the Interim
Date and related
statement of products shipped and operating expenses of the
Business for the
nine (9) month period then ended (the "Unaudited Interim Financial
Statements"
and, collectively, with the Unaudited Annual Financial Statements,
the
"Unaudited Financial Statements"). The Unaudited Financial
Statements were
created specially by Seller in connection with the transactions
contemplated
hereby from Seller's financial records. Except as set forth on
Schedule 3.3(a),
the Unaudited Annual Financial Statements and, subject to the
foregoing
circumstances with respect to their creation and the remainder of
this Section
3.3, the Unaudited Interim Financial Statements, (i) are derived
from and in
accordance with the books and records of Seller; (ii) present
fairly, in all
material respects, the financial position of the Business for the
respective
periods then ended; (iii) have been prepared in accordance with
Seller's normal
practices for the Business (which practices are in accordance with
GAAP, except,
with respect to the Unaudited Interim Financial Statements, for
normal year end
adjustments, consistently applied with prior periods and with
respect to the
Unaudited Financial Statements, the absence of footnotes and other
disclosures
required by GAAP) and (iv) are true, complete and correct in all
material
respects. The Business has not operated as a separate "stand-alone"
entity and
the Unaudited Financial Statements do not present the results of
operation that
would have occurred if the Business had been operated as a
"stand-alone" entity.
As a result, certain judgments regarding financial allocations have
been made as
discussed more fully in the notes accompanying the Unaudited
Financial
Statements. In addition, in order to present Unaudited Financial
Statements for
the Business, a number of assumptions regarding the basis of
presentation have
been made, all of which are set forth on Schedule 3.3(a).
(b) Seller has established and maintains a system of internal
accounting controls sufficient to provide reasonable assurances (i)
that
transactions, receipts and expenditures of Seller related to the
Business and
the Assets are being executed and made only in accordance with
appropriate
policies and procedures and appropriate authorizations of
management and the
board of directors of Seller, (ii) that transactions related to the
Business and
the Assets are recorded as necessary (A) to permit preparation of
financial
statements in conformity with GAAP and (B) to maintain
accountability for assets
and (iii) regarding prevention or timely detection of unauthorized
acquisition,
use or disposition of the Assets. To the Knowledge of Seller, since
December 31,
2001, Seller has not identified or been made aware of any fraud
that involves
the Assets, the Business or its management, or other current
employees or any
claim or allegation regarding any of the foregoing and Seller has
received no
written notice from its independent auditors regarding any of the
foregoing. To
the Knowledge of Seller, there are no significant deficiencies or
material
weaknesses in the design or operation
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of Seller's internal controls relating to the Assets or the
Business which could
reasonably be expected to adversely affect Seller's ability to
record, process,
summarize and report financial data.
3.4 Operations Since Interim Date.
(a) Since the Interim Date through the date hereof, Seller has
conducted the Business only in the ordinary course consistent with
past
practice.
(b) Except as set forth on Schedule 3.4(b), since the Interim
Date,
with respect to the Business or the Assets, there has not
occurred:
(i) any material damage, destruction, casualty or loss with
respect to any property (whether or not covered by insurance);
(ii) any material labor dispute or claim of unfair labor
practices;
(iii) incurrence, creation or assumption of any Encumbrance
(other than a Permitted Encumbrance) on any Assets;
(c) Except as set forth on Schedule 3.4(c), since the Interim
Date
through the date hereof, Seller has not:
(i) made any material change in the Business or its operations,
except such changes as may be required to comply with any
applicable
Requirements of Law;
(ii) made any capital expenditure related to the Business or
entered into any Contract related to the Business or commitment
therefor in
excess of five hundred thousand dollars ($500,000) in the
aggregate, except in
the ordinary course of business consistent with past practice or in
accordance
with a capital expenditures budget attached hereto as Schedule
3.4(c)(ii) (the
"Capital Expenditures Budget");
(iii) entered into any material Contract related to the
Business
for the purchase or lease (as lessor or lessee) of real property,
except in the
ordinary course of business consistent with past practice;
(iv) sold, leased (as lessee or lessor), transferred or
otherwise
disposed of, mortgaged or pledged or imposed any Encumbrance (other
than
Permitted Encumbrances) on any of the Assets, other than sales or
other
dispositions of inventory in the ordinary course of business
consistent with
past practice and personal property sold or otherwise disposed of
in the
ordinary course of business consistent with past practice which is
excess,
obsolete or is not material to the Business;
(v) created, incurred or assumed, or agreed to create, incur or
assume, any indebtedness for borrowed money related to the Business
(other than
money borrowed or advanced from Seller in the ordinary course of
business
consistent with past practice or any unsecured indebtedness which
is an Excluded
Liability);
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(vi) instituted any material increase in any, entered into,
adopted, terminated or materially amended any profit sharing,
bonus, incentive,
deferred compensation, insurance, pension, retirement, medical,
hospital,
disability, severance, termination, welfare or other employee
Benefit Plan with
respect to employees of the Business, other than in the ordinary
course of
business, as required by any such existing plan. or pursuant to any
existing
employment or collective bargaining agreement or by Requirements of
Law;
(vii) made any material change in the compensation or benefits
of
employees of the Business, other than changes made in accordance
with normal
compensation practices and consistent with past practices of Seller
or changes
pursuant to employment or collective bargaining agreements or
required by any
Requirements of Law;
(viii) entered into any Contract which is or would be included
in
the definition of Assigned Contracts or terminated, extended,
renewed or made
any material modification to any existing Assigned Contract, in
each case other
than any Contracts related to the Business or any extensions
thereof which
involve ten million dollars ($10.000,000) or less and which are
entered into or
modified in the ordinary course of business consistent with past
practice;
(ix) with respect to the Business, acquired or purchased any
material properties or assets (other than capital expenditures or
purchases in
the ordinary course of business consistent with past practice),
merged or
consolidated with, or acquired all or substantially all of the
assets of, or
otherwise acquired, any Person, or made any material investment in
any Person;
(x) made any loans or advances (other than in the ordinary
course
of business or routine expense advances to employees of the
Business consistent
with past practice) to, or any investments in or capital
contributions to, any
Person or forgiven or discharged in whole or in part any
outstanding loans or
advances, or prepaid any indebtedness for borrowed money, in any
such case, in
connection with the Business;
(xi) made any changes in accounting methods or practices
(including any change in depreciation or amortization policies or
rates or
revenue recognition policies) or revalued any of the Assets
(including writing
down the value of inventory other than in the ordinary course of
business),
except in each case as required by changes in GAAP;
(xii) changed in any material way the manner in which Seller
provides warranties, discounts, credits, accommodations or other
concessions to
direct customers of the Business;
(xiii) commenced a material lawsuit or settled or agreed to
settle any material pending or threatened lawsuit or other material
dispute
related to the Business in any such case, other than (A) for the
routine
collection of bills or (B) in such cases where it in good faith
determined that
failure to commence suit would have resulted in the material
impairment of a
valuable asset of the Business;
(xiv) sold, conveyed, disposed of or otherwise transferred in
any
manner any portion of the Owned Property;
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(xv) terminated, amended or modified in any material manner,
any
Contract related to the use of the Facilities; or
(xvi) taken, or agreed in writing or otherwise to take, any of
the actions described in clauses (i) through (xv) of this Section
3.4(c).
3.5 Taxes.
(a) Seller has filed or will have filed on a timely basis all
material
Tax Returns related to the Business or the Assets in connection
with any
federal, state or local Tax required to be filed by it, and all
such Tax Returns
were or will be true, complete and correct in all material
respects. Seller has
or will have timely paid all material Taxes related to the Business
or the
Assets that have become due except as contested upon audit.
(b) None of the Assets is subject to any lien in favor of the
United
States pursuant to Section 6321 of the Code for nonpayment of
federal Taxes, or
any lien -in favor of any state or locality pursuant to any
comparable provision
of state or local Law, under which transferee Liability might be
imposed upon
Buyer as a buyer of such Assets pursuant to Section 6323 of the
Code or any
comparable provision of state or local Law.
(c) No Tax Return of Seller relating to property Taxes,
transfer
Taxes, sales or use Taxes or any Tax for which Buyer could have
Liability as a
transferee of the Business or the Assets is under audit or
examination by any
Governmental Authority, and no written notice of such an audit or
examination
has been received by Seller. Each deficiency resulting from any
audit or
examination relating to any such Taxes by any Governmental
Authority has been
paid, except for deficiencies being contested in good faith by
appropriate
Proceedings. Seller has not given nor is there a pending request to
give waivers
or extensions (or is or would be subject to a waiver or extension
given by any
other Person) of any statute of limitations relating to any such
Taxes.
(d) All Taxes related to the Business that are required by
Requirements of Law to be withheld or collected have been duly
withheld or
collected and, to the extent required, have been paid to the proper
Governmental
Authority or Person.
3.6 Governmental Permits.
(a) Set forth on Schedule 3.6 are all material Permits owned, held
or
possessed by Seller that are used in the Business or necessary to
entitle it to
own or lease, operate and use the Assets and to carry on and
conduct the
Business as currently conducted (herein collectively called
"Governmental
Permits"). With respect to each Permit set forth on Schedule 3.6,
Seller has
indicated on such Schedule whether or not such Permit is permitted
by the terms
thereof to be transferred to Buyer, and, if a Permit is permitted
to be
transferred to Buyer, whether or not such Permit is needed by
Seller to continue
to operate its businesses other than the Business.
(b) Except as set forth on Schedule 3.6, since January 1, 2002,
Seller
has not received any written notice or written communication from
any
Governmental Authority (each a "Permit Notice") regarding (i) any
actual or
possible violation of any Law with respect to
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requiring a Person to obtain a Governmental Permit or of any
failure to comply
with any term or requirement of any Governmental Permit or (ii) any
actual or
possible revocation, withdrawal, suspension, cancellation,
termination or
modification of any Governmental Permit, that has not been
resolved.
(c) Set forth on Schedule 3.6 are all Permit Notices that, to
the
Knowledge of Seller, have been resolved since January 1, 2004.
(d) None of the Governmental Permits (other than as indicated
on
Schedule 3.6) will be terminated or impaired, or will become
terminable, in
whole or in part, as a result of the consummation of the
transactions
contemplated by this Agreement.
3.7 Real Property.
(a) Schedule 3.7 contains a complete and accurate list of the
following:
(i) each lease, sublease, license and other written occupancy
agreement pursuant to which Seller holds or has been granted the
right to use or
occupy, now or in the future, the Leased Property or any portion
thereof,
including any and all modifications, amendments, renewals,
extensions and
supplements thereto and any assignments thereof (collectively, the
"Leases")
and, except as set forth on Schedule 3.7, the legal description of
the real
property leased thereunder;
(ii) all Contracts, rights of first refusal or options (and all
amendments, extensions and modifications thereto) granted by or to
Seller, or
contractual obligations (and all amendments, extensions and
modifications
thereto) on the part of Seller to purchase or acquire any interest
in real
property to be used primarily in the Business; and
(iii) all Contracts, rights of first refusal or options (and
all
amendments, extensions and modifications thereto), or contractual
obligations
(and all amendments, extensions and modifications thereto) to sell
or dispose of
any interest in real property used in the Business.
(b) The Owned Property and Leased Property collectively represent
all
of the real property primarily used or held for use by Seller in
the Business
and is all of the real property necessary to operate the Business
as currently
conducted. Except as set forth on Schedule 3.7, Seller has the
exclusive right
under the Leases to occupy and use all Leased Property and Seller
is in quiet
and undisturbed possession of the Leased Property. Except as set
forth on
Schedule 3.7, Seller (x) owns and holds fee simple title to the
Owned Property
and (y) has good and valid leasehold title in and to the Leased
Property. Seller
has received all material Permits of Governmental Authorities
(including without
limitation Permits and a certificate of occupancy or other similar
certificate
permitting the use and occupancy of the Facilities as currently
used by Seller)
required in connection with the operation thereof. The improvements
constructed
on the Facilities, including without limitation all buildings,
structures and
improvements, owned or leased by Seller at the Facilities are to
the Knowledge
of Seller (w) in good operating condition and repair, subject to
ordinary wear
and tear, (x) sufficient for the operation of the Business as
currently
conducted and (y) in compliance with all applicable Laws. To the
Knowledge of
Seller, there are no facts which would prevent the Facilities
from
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being occupied and used after the Closing by Buyer in a manner
comparable to
that of Seller prior to Closing.
(c) Except as set forth on Schedules 3.7 and 3.15, during the
three
(3) years prior to the date hereof, Seller has not received any
written notice
that it is, and Seller has no Knowledge that it is, in material
violation of any
planning, health, safety, fire, zoning, use, occupancy or building
regulation,
wetlands or Environmental Law or other Law or requirement relating
to the
Facilities, including without limitation the Americans With
Disabilities Act and
Environmental Laws, or any order, regulation, deed restriction,
covenant, site
plan approval, subdivision regulations, urban redevelopment plan,
covenant or
requirement, and the use being made of the Facilities at present is
in
compliance in all material respects with the certificate of
occupancy issued for
the applicable Facility.
(d) Except as set forth on Schedule 3.7, (i) each Lease is in
full
force and effect, and is valid and binding upon Seller and, to the
Knowledge of
Seller, to each other party thereto, (ii) Seller is in compliance
in all
material respects with the terms of each Lease and, to the
Knowledge of Seller,
no event has occurred and no condition exists which, with the
giving of notice
or the lapse of time or both, would constitute a default or
termination event by
Seller or any other party thereto under a Lease, (iii) no consent
or approval of
any Person or entity is required for the valid conveyance of the
Leased Property
and assignment of each Lease to Buyer in accordance with the terms
of this
Agreement, except as identified on Schedule 7.5 as a "Required
Consent", (iv)
Seller has not entered into a lease, sublease, license or other
occupancy
agreement of any kind, whether oral or written, pursuant to which
Seller has
granted a third party a right to use or occupy any portion of the
Facilities,
(v) subject to receipt of the Required Consents applicable thereto,
consummation
of the transactions contemplated by this Agreement shall not cause
a default
under any Lease or other agreement affecting the Facilities, and
(vi) no Lease
is subject to or encumbered by any Encumbrance or other restriction
which
materially impairs the use of the property to which it relates in
the Business
of Seller as now conducted by Seller.
(e) To the Knowledge of Seller, there is no Proceeding seeking
to
challenge, condition or restrict the ownership, lease, use,
occupancy or
operations by Seller at all or any portion of any Facility and
Seller has
received no written notice thereof. Seller has received no written
notice that
it lacks any Permit required for the ownership, lease, use,
occupancy or
operations of Seller at all or any portion of any Facility.
(f) Except as set forth on Schedule 3.7, no Person other than
Seller
holds any right, title or interest in or to the Owned Property and
no Person
other than Seller holds a leasehold interest in the Leased Property
and Seller
has not granted any leases, subleases, licenses, concessions or
other agreements
granting to any Person any right to the possession, use, occupancy,
or enjoyment
of any Facility or any portion thereof.
(g) To the Knowledge of Seller, there are no existing or
threatened,
(i) Proceedings to rezone any portion of the Facilities or (ii)
condemnation or
eminent domain Proceedings affecting the Facilities or any portion
thereof.
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(h) The covenants, conditions, rights-of-way, easements and
similar
restrictions burdening all or any portion of the Facilities do not,
in each
case, impair in any material respect the use of any such Facilities
in the
operation of the Business as currently conducted by Seller, and to
the Knowledge
of Seller, no default or breach exists thereunder by Seller. Upon
consummation
of the transactions contemplated by this Agreement and conveyance
of the Assets
(exclusive of the IDS Site) to Buyer, Buyer shall be entitled to
enjoy the
benefit of all covenants, conditions, rights-of-way, easements,
access
agreements and similar agreements benefiting all or any portion of
the
Facilities which Seller enjoys as of the date hereof (collectively,
the
"Beneficial Easements"), or, if the rights, privileges and benefits
granted to
Seller pursuant to any such Beneficial Easement are not
transferable by their
terms to Buyer or if Seller elects in its reasonable discretion not
to convey
any such Beneficial Easement to Buyer at Closing, then in either
such event,
Seller shall obtain for Buyer at or prior to Closing, at Seller's
expense and
subject to Buyer's approval thereof, all such agreements,
easements, written
arrangements and other instruments as may be required by Buyer in
order to
receive all rights, privileges and benefits equivalent to those
held by Seller
pursuant to any such Beneficial Easement.
(i) Seller has good and valid rights of ingress and egress to and
from
all of the Facilities from and to the public street systems for all
usual
street, road and utility purposes and other purposes necessary or
incidental to
the operation of the Business as currently operated by Seller or
has access to
such public street system via a permanent, irrevocable easement
benefiting the
relevant Facility.
(j) All improvements, buildings and structures located on the
Facilities are supplied with adequate utilities and other services
necessary for
the operation of the Business as currently conducted by Seller. The
Facilities
are served, as of the date hereof, with water and sanitary sewer
service
provided by the local municipality in such quality, quantity and
manner as are
sufficient for the use and operation of the Facilities as currently
operated by
Seller. At Closing, Seller shall convey, transfer and deliver to
Buyer all
existing agreements, written arrangements, easements and other
instruments (or
the equivalent thereto in form and substance acceptable to Buyer)
providing for
the delivery and provision of electric, gas, fuel, water and other
utility
services to the Facilities.
(k) To the Knowledge of Seller, no Facility or any portion thereof
is
located within a flood plain as defined by the Federal Emergency
Management
Agency. Seller holds, pursuant to (1) paragraph 5.4 of the Lease
dated October
12, 1979 (and identified in Schedule 1.l(a)(xiii); (2) paragraph
4.2 of the
Lease dated July 1, 1994 (and identified in Schedule 1.l(a)(xiii);
and (3) that
certain License and Use Agreement dated July 1, 1994 between Tulsa
Airports
Improvement Trust and Seller (the documents identified in items
(1), (2) and (3)
of this Section 3.7(k) are collectively referred to as the "Tulsa
Airport Use
Agreements"), good and valid rights in common with the public, of
ingress to and
egress from, and the use of taxiways, ramps, runways and other
ancillary rights
at Tulsa International Airport, as are necessary for the operation
of the
Business at the Facilities, or any portion thereof. Seller is not
in violation
or breach of the Tulsa Airport Use Agreements and, to the Knowledge
of Seller,
no event or condition exists which, with the passage of time or the
giving of
notice or both, could result in an event of default under the Tulsa
Airport Use
Agreements.
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(l) Seller has delivered to Buyer true, correct and complete copies
of
(i) all Leases, including all modifications, amendments and
supplements thereto
and (ii) all Contracts and other instruments or documents pursuant
to which
Seller holds an interest in or to any portion of the Facilities or
has been
granted a material right benefiting Seller in its use of the
Facilities.
(m) The BID is an industrial district formed pursuant to the
provisions of Sections 19-3801, et seq. of the Kansas Statutes
Annotated and is
validly existing and in good standing. The Non-Annexation Agreement
(BID) is in
full force and effect, and is valid and binding upon Seller, and to
the
Knowledge of Seller, upon the City of Wichita. There has been no
material change
to the Non-Annexation Agreement (BID). Seller is in compliance in
all material
respects with the terms of the Non-Annexation Agreement (BID) and,
to the
Knowledge of Seller, no event has occurred and no condition exists
which, with
the giving of notice or lapse of time or both, would constitute a
default or a
termination event by Seller or the City of Wichita under the
Non-Annexation
Agreement (BID).
3.8 Assets of the Business.
(a) Except as set forth in Section 4.8 or Schedule 3.8, the
Assets,
the Assigned Contracts and the rights provided to Buyer under the
Buyer
Transaction Agreements comprise all of the assets, tangible and
intangible, of
any nature whatsoever, and rights of Seller used in or necessary
for the conduct
of the Business as currently conducted.
(b) The tooling transferred to Buyer hereunder, together with
the
tooling rights granted to Buyer pursuant to the Buyer Transaction
Agreements, is
all the tooling used in or necessary for the conduct of the
Business as
currently conducted and for Buyer to perform under the BCA Supply
Agreement.
3.9 Software.
(a) To the Knowledge of Seller, Schedule 3.9(a) contains a list of
all
material Software licensed by Seller used in the operation of the
Business as
currently conducted.
(b) Except as set forth on Schedule 3.9(b), Seller has the right
and
license to use the Software set forth on Schedule 3.9(a) in the
conduct of the
Business pursuant to the Assigned Contracts identified pursuant to
Section
3.11(a).
3.10 No Violation, Litigation or Regulatory Action.
(a) To the Knowledge of Seller, except as set forth on Schedule
3.10(a) and 3.15, Seller is in compliance in all material respects
with, and has
complied in all material respects with, all applicable Requirements
of Law
related to the Business and the Assets;
(b) Except as set forth on Schedule 3.10(b), there are no
material
Proceedings related to the Business or the Assets pending or, to
the Knowledge
of Seller, threatened, against Seller;
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(c) Except as set forth on Schedule 3.10(c) and 3.15, there is
no
Court Order against Seller related to the Business or the
Assets;
(d) Except as set forth on Schedule 3.10(d), Seller does not have
any
material Proceedings pending against any other Person related to
the Business or
the Assets;
(e) There is no Proceeding pending or, to the Knowledge of
Seller,
threatened, that (i) questions the legality or propriety of the
transactions
contemplated by this Agreement or any of the Seller Transaction
Agreements or
(ii) would reasonably be expected to prevent, hinder or delay the
consummation
of any of the transactions contemplated hereby; and
(f) Except as set forth on Schedule 3.10(f), with respect to
the
Business or the Assets, since January 1, 2002, (i) Seller has not
received any
written notice or written communication from any Governmental
Authority
regarding any actual or possible material violation of Law, that
has not been
resolved and (ii) to the Knowledge of Seller, Seller has not
received any
written notice or written communication from any Governmental
Authority
regarding any actual or possible material violation of Law that has
been
resolved since January 1, 2004.
3.11
Contracts.
(a) Except as set forth on Schedule 3.11(a), Seller is not party to
or
bound by any of the following Contracts primarily related to the
Business or the
Assets:
(i) any Contract (other than purchase orders issued or received
in the ordinary course of business) involving the obligation of
Seller to
purchase or sell products or services pursuant to which the
aggregate of
payments to become due from or to Seller is equal to or exceeds two
million
dollars ($2,000,000) over the life of the Contract;
(ii) any option or other agreement of Seller to purchase or
otherwise acquire or sell or otherwise dispose of any interest in
real property;
(iii) any commitment of Seller to make a capital expenditure or
to purchase a capital asset, not contemplated by the Capital
Expenditures
Budget;
(iv) any Contract for the employment of any employee or any
other
type of Contract with any employee that is not immediately
terminable by Seller
without cost or Liability;
(v) any Contract that expires or may be renewed at the option
of
any Person other than Seller so as to expire more than one year
after the date
of this Agreement;
(vi) any Contract or written arrangement involving a
partnership,
joint venture or other cooperative undertaking;
(vii) any Contract containing covenants that in any way purport
to restrict the business activity of the Business or limit the
freedom of the
Business to engage in any
35
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line of business or to compete with any Person, except for any such
restrictions
which will not apply to Buyer after the Closing;
(viii) any Contract providing for commissions or other payments
to or by any Person based on or determined by reference to sales,
purchases or
profits, other than direct payments for goods and royalty
agreements related to
Intellectual Property;
(ix) any Contract that was not entered into in the ordinary
course of business;
(x) any Contracts related to the Facilities pursuant to which
Seller, the Facilities or the Business receives or is entitled to
receive Tax or
other monetary benefits of any kind; and
(xi) any other oral or written Contract or obligation (other
than
purchase orders issued or received in the ordinary course of
business) not
listed in clauses (i) through (x) that individually has an annual
value or
commitment in excess of five million dollars ($5,000,000) or is
otherwise
material to the Business.
(b) Except as set forth on Schedule 3.11(b), each Business
Agreement
is, with respect to Seller, valid, binding and in full force and
effect, and
with respect to any other party, to the Knowledge of Seller, valid,
binding and
in full force and effect. Except as set forth on Schedule 3.11(b),
Seller and,
to the Knowledge of Seller, each other party thereto has performed
all material
obligations required to be performed by it to date under each
Business Agreement
and is not in breach or default or to the Knowledge of Seller,
alleged to be in
breach or default, of any material obligation thereunder. True,
complete and
correct copies of all Business Agreements have been made available
or delivered
to Buyer, except that in copies made available or delivered to
Buyer prior to
the date hereof certain pricing information and, in some cases, the
name of the
supplier, has been redacted therefrom.
(c) In the event Seller cannot provide Buyer with an unredacted
copy
of any Business Agreement or Excluded Supply Contract pursuant to
the provisions
of Section 5.1 prior to the Closing Date, Seller represents that,
to the extent
applicable, the pricing information in any remaining redacted
Business Agreement
or Excluded Supply Contract is in all material respects accurately
reflected in
the cost data in the procurement system of the Business provided to
Buyer prior
to the date hereof.
3.12 Title to Assets.
(a) Seller has good and valid title to all of the Assets, free
and
clear of all Encumbrances, except Permitted Encumbrances.
(b) The plant, property and equipment of Seller that are used in
the
Business are (i) in a condition and state of repair sufficient for
the purposes
for which they are presently used and (ii) not obsolete, dangerous
or in need of
renewal or replacement, except for renewal or replacement in the
ordinary course
of business, consistent with past practice. There are no properties
or assets or
rights to any properties or assets used in or necessary for the
operation of the
Business which are owned or held by any subsidiary or Affiliate of
Seller.
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3.13 No Brokers. Except for Goldman, Sachs & Co., whose fees
shall be
paid by Seller, Seller has not become obligated to pay any fee or
commission to
any broker, finder or intermediary for or on account of the
transactions
contemplated by this Agreement.
3.14 ERISA.
(a) Each Benefit Plan is set forth on Schedule 3.14(a) (the
"Plans"),
and Seller has delivered or made available to Buyer, true and
complete copies of
(i) the most current version of each such Plan and any amendments
thereto, (ii)
the most current Summary Plan Description thereto, together with
each Summary of
Material Modifications thereto, (iii) the most recent actuarial
reports for each
Benefit Plan which is a "defined benefit plan" (with the meaning of
Section
3(35) of ERISA), and (iv) the most recent favorable determination
letter, if
any, for such Plan.
(b) With respect to each Plan: (i) each such Plan has been
maintained
and operated in material compliance with its terms and with the
applicable
requirements of the Code and ERISA and the regulations issued
thereunder, (ii)
except as set forth on Schedule 3.10(a), (b), (c) or (d), no
material litigation
or asserted claims against Seller exist with respect to any such
Plan other than
claims for benefits in the normal course of business, and (iii) no
material
claim by the IRS, the Pension Benefit Guaranty Corporation or the
Department of
Labor is currently pending.
(c) Each Plan intended to qualify under Section 401(a) of the
Code
meets the requirement to so qualify and, except as set forth on
Schedule
3.14(c), has received a favorable determination letter that it is
so qualified
by the IRS.
(d) With respect to each Benefit Plan, all required payments,
premiums, contributions, reimbursements or accruals for all periods
ending prior
to or as of the Closing Date has been made or will be timely
made.
(e) Except as set forth on Schedule 3.14(e), neither the execution
and
delivery of this Agreement nor the consummation of any of the
transactions
contemplated hereby will (i) directly or indirectly result in any
payment made
or to be made on behalf of any pension to constitute a "parachute"
payment
within the meaning of Section 280G of the Code, or (ii) require the
immediate
funding or financing of any compensation or benefits, which could
reasonably
become a Liability of Buyer.
3.15 Environmental Compliance. Except as set forth on Schedule
3.15:
(a) The Business is in compliance in all material respects with
current applicable Environmental Laws and all settlements, consent
orders and
Proceedings.
(b) Seller possesses all material Permits required under
Environmental
Laws for operation of the Business as currently conducted.
(c) To the Knowledge of Seller, there has been no release of
any
Hazardous Substance from the Business at any of the Facilities, at
any property
formerly owned, operated or used by the Business, or at any other
location to
which the Business have sent waste, that is in
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violation of or is reasonably likely to lead to material Liability
arising under
any Environmental Law.
(d) During the three (3) years prior to the date hereof, Seller
has
not received any written notice of a material violation, nor, to
the Knowledge
of Seller, is any material claim or action pending or threatened,
asserting
actual or potential Liability under any Environmental Law in
respect to the
Business.
(e) All material environmental studies and audits conducted in
relation to the Facilities in the last five (5) years of which
Seller has
custody or control have been delivered, or made available for
review (and to
copy) to Buyer.
(f) Notwithstanding any other provisions of this Agreement,
Buyer
acknowledges and agrees that the representations and warranties
contained in
this Section 3.15 are the only representations and warranties given
by Seller
with respect to environmental matters or compliance with
Environmental Laws and
Hazardous Substances and no other provisions of this Agreement
shall be
interpreted as containing any representation or warranty with
respect thereto.
3.16 Employee Relations and Agreements.
(a) In connection with the Business, to the Knowledge of
Seller,
Seller has complied in all material respects with all Requirements
of Law
relating to employment practices, terms and conditions of
employment, equal
employment opportunity, nondiscrimination, immigration, wages,
hours, benefits,
collective bargaining and other Requirements of Law, the payment of
social
security and similar Taxes and occupational safety and health. To
the Knowledge
of Seller, Seller is not liable for the payment of any Taxes,
fines, penalties,
or other amounts, however designated, for failure to comply with
any of the
foregoing Requirements of Law. Schedule 3.16(a) contains a list of
all
collective bargaining agreements or other agreements with any labor
union or
other bargaining unit relating to the employees of the Business
that Seller is
now, and has been, party to during the past three (3) years.
(b) Except as set forth on Schedule 3.16(b), in connection with
the
Business, (i) within the past five (5) years, there has not been
and there is
not presently existing, and to the Knowledge of Seller there is not
threatened
any strike, slowdown, picketing, work stoppage or mass employee
grievance
process involving Seller; (ii) to the Knowledge of Seller, within
the past five
(5) years, no event has occurred or circumstance exists that could
provide the
basis for any strike, slow down, picketing, work stoppage or other
mass
grievance action; (iii) there is not pending or, to the Knowledge
of Seller,
threatened against or affecting Seller any material Proceeding
relating to an
alleged violation of any Requirement of Law pertaining to labor
relations or
employment matters, including any charge or complaint filed with
the National
Labor Relations Board or any comparable Governmental Authority,
and, to the
Knowledge of Seller, there is no organizational activity or other
labor dispute
against or affecting Seller or the Facilities; (iv) no application
or petition
for an election of or for certification of a collective bargaining
agent is
pending; (v) no grievance or arbitration Proceeding exists, or to
the Knowledge
of Seller, is threatened that would be reasonably likely to have a
Material
Adverse Effect; (vi) there is no lockout of any employees by
Seller, and no such
action is contemplated by
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Seller, (vii) within the past five (5) years, there has been no
charge of
discrimination filed against Seller with the Equal Employment
Opportunity
Commission (the "EEOC") or other Governmental Authority that would
be reasonably
likely to have a Material Adverse Effect; (viii) there is no
Proceeding pending
before the EEOC and Seller has not received any written notice of
any pending
investigation by the EEOC; and (ix) there is no Proceeding pending
before any
Governmental Authority (other than the EEOC) or private arbitration
tribunal
relating to labor or employment matters, and Seller has not
received any written
notice of any pending investigation by any such body or agency
relating to labor
or employment matters of the Business, that would be reasonably
likely to have a
Material Adverse Effect. True, complete and correct copies of all
existing
collective bargaining agreements or labor Contracts covering
employees of the
Business have been made available to Buyer.
3.17 No Undisclosed Liabilities. The Business does not have any
Liabilities of a nature required by GAAP to be reflected on or
disclosed in the
footnotes or on the face of a balance sheet of the Business except
for (i)
Liabilities disclosed, reflected or reserved against in the
Unaudited Financial
Statements, (ii) Liabilities incurred after the Interim Date in the
ordinary
course of business, (iii) the matters disclosed in or arising out
of matters set
forth on Schedule 3.17 and the other Schedules to this Agreement or
which are
the subject of other representations and warranties set forth
herein, (iv)
Liabilities incurred in connection with this Agreement and the
transactions
contemplated hereby and (v) Liabilities which do not and could not
have a
Material Adverse Effect. Notwithstanding the foregoing, no
representation and
warranty is made pursuant to this Section 3.17 with respect to any
matter that
is specifically addressed by another representation or warranty
contained in
this Section 3 or any certificate delivered pursuant hereto.
3.18 Security Clearance. Except as may be prohibited by the
National
Industrial Security Program Operating Manual, Schedule 3.18 sets
forth all
facility and personnel security clearances related to the Business
or the
Assets. Except as set forth in Schedule 3.18, if the United States
Department of
Defense grants Buyer a facility security clearance and Buyer then
reinstates the
personnel security clearances, such security clearances are
sufficient to allow
Buyer to conduct the Business as currently conducted by Seller.
Except as set
forth in Schedule 3.18, to the Knowledge of Seller, there is no
proposed or
threatened termination or invalidation of any facility or personnel
security
clearances related to the Business or the Assets.
3.19 Employees of the Business.
(a) Except as set forth in Schedule 3.19(a), all employees
necessary
to conduct the Business as currently conducted are employees of
Seller.
(b) To the Knowledge of Seller, Seller has not materially
violated
WARN or any similar state or local Requirement of Law in the past
three (3)
years.
(c) To the Knowledge of Seller, no employee, consultant, or
contractor
of the Business is bound by any Contract that purports to limit the
ability of
such employee, consultant, or contractor (i) to engage in or
continue or perform
any conduct, activity, duties or practice related to the Business
or (ii) to
assign to Seller or to any other Person any rights to any
invention,
improvement, or discovery. To the Knowledge of Seller, no current
employee of
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Seller is a party to, or is otherwise bound by, any Contract that
in any way has
adversely affected, affects, or will adversely affect the ability
of Seller or
Buyer to conduct the Business as currently conducted.
3.20 Government Contracts.
(a) Except as set forth on Schedule 3.20(a), with respect to
each
Government Contract or Government Bid to which Seller is a party:
(i) Seller has
complied with all material terms and conditions thereof and all
applicable Laws
which relate to the Business; (ii) Seller is on schedule to meet
the
contractually specified delivery dates for those items that relate
to the
Business; (iii) no written notice has been received by Seller (and,
to the
Knowledge of Seller, none has been threatened) alleging that
Seller, or any
director, officer or employee of the Business, is in breach or
violation of any
Law or contractual requirement as the same relate to the Business;
and (iv) no
written notice of termination, cure notice or show-cause notice has
been
received by Seller (and to the Knowledge of Seller, none has been
threatened)
for items that relate to the Business.
(b) Except as set forth on Schedule 3.20(b), no Governmental
Authority
nor any prime contractor, subcontractor or vendor has asserted in
writing any
claim or initiated any dispute Proceeding against Seller relating
to Government
Contracts or Government Bids involving the Business and to the
Knowledge of
Seller no such claim or dispute is threatened, nor is Seller
asserting any claim
or initiating any dispute Proceeding directly or indirectly against
any such
party concerning any Government Contract or Government Bid.
(c) The rates and rate schedules submitted to Governmental
Authorities
with respect to the Government Contracts primarily related to the
Business or
otherwise included in the Assets have been closed for all years
prior to 1995.
Except as set forth on Schedule 3.20(c), (i) there are no audit
issues, demands,
or unresolved accounting issues with respect to any Government
Contracts that
relate to the Business and (ii) there are no claims or assessments
by any
Governmental Authority or any other customer that relate to the
Business.
3.21 Services. Set forth on Schedule 3.21 is a list of all
categories
of services which are provided to the Business by Seller or any of
its
Affiliates.
3.22 Insurance. Within the past three (3) years, Seller has not
received any written notice of cancellation of any insurance
policies insuring
the Business or the Assets. Schedule 3.22 sets forth, by year, for
the current
policy year and each of the five (5) preceding policy years: (a) a
summary of
the loss experience related to the Business or the Assets under
each policy of
insurance; and (b) a statement describing each claim primarily
related to the
Business or the Assets (other than workers compensation claims, for
which Seller
shall include a summary of the loss experience relating thereto,
and excluding
general aircraft product liability claims), which sets forth: (i)
the name of
the claimant and (ii) a description of the policy by insurer, type
of insurance
and period of coverage.
3.23 Customers and Suppliers.
(a) To the Knowledge of Seller, there are no outstanding
material
disputes related to the products manufactured by the Business with
any
third-party customer or
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distributor. Since January 1, 2003, Seller has not had any products
manufactured
by the Business returned by a third-party customer, except for
normal returns
and rework consistent with past history.
(b) Except as set forth on Schedule 3.23(b), to the Knowledge
of
Seller, since January 1, 2003, the Business has not had a material
dispute with
another business of Seller with respect to any products delivered
by the
Business.
(c) Except as set forth on Schedule 3.23(c), Seller has no
outstanding
material dispute related to the Business concerning products and/or
services
provided by any supplier. Each supplier of the Business to which
the Business
incurred obligations in excess of twenty-five million dollars
($25,000,000)
during the twelve-month period immediately prior to the date hereof
is listed on
Schedule 3.23(c). Seller has not received any written information
from any
supplier listed on Schedule 3.23(c) that such supplier shall not
continue as a
supplier to Seller (or Buyer after the Closing) or that such
supplier intends to
terminate or modify existing Contracts related to the Business with
Seller.
Seller has access, on commercially reasonable terms, to all
products and
services reasonably necessary to carry on the Business, and to the
Knowledge of
Seller, there is no reason why it (or Buyer after the Closing) will
not continue
to have such access on commercially reasonable terms.
3.24 Inventory. All items included in the Inventory, including
without
limitation all Inventory shown on the Unaudited Financial
Statements and all
Inventory thereafter created or acquired by Seller on or prior to
the Closing
Date wherever located, has been created or acquired in the ordinary
course of
business. All Inventory is in the possession or control of Seller
at the
locations listed under paragraph (a) of Schedule 3.24, except for
(x) Spares
Inventory which is located at the locations listed under paragraph
(b) of
Schedule 3.24 and (y) items that are in the possession or control
of suppliers
set forth on Schedule 3.23(c). Such Inventory is in good and
marketable
condition and held for sale.
3.25 No Material Adverse Effect. Since the Interim Date, there has
not
been a Material Adverse Effect, and no event has occurred or
circumstance exists
that could reasonably be expected to result in a Material Adverse
Effect.
3.26 Product Warranty and Product Liability. Schedule 3.26(a)
sets
forth all standard warranty terms delivered by Seller in connection
with
products sold or services rendered by Seller in the operation of
the Business
since January 1, 2001. Schedule 3.26(b) sets forth a true, correct
and complete
warranty expense history incurred by Seller for warranty work
performed on
products of the Business since January 1, 2001. Except as set forth
on Schedule
3.26(c), since January 1, 2001, with respect to the Business or the
Assets, (i)
there are no outstanding Federal Aviation Administration mandated
retro-fit
campaigns for warrantable conditions applicable to the products of
the Business,
and (ii) to the Knowledge of Seller, there is no systemic design,
manufacturing
or other defect in any model or type of product or product
specification of
Seller in connection with any product manufactured, sold, leased,
or delivered
by the Business.
3.27 Export/Foreign Corrupt Practices Act. To the Knowledge of
Seller,
with respect to the Business, during the last five (5) years:
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(a) Seller has been and is in compliance with in all material
respects
all United States export control Laws, including trade sanctions
and embargoes
to which the United States is a party. Seller has filed voluntary
disclosures of
export violations relating to its commercial aircraft operations
and its defense
operations, but none of the matters addressed in these voluntary
disclosures
involves the Business as exporter;
(b) the Seller has had and has all necessary authority under
the
United States export control Laws to conduct the Business as
currently conducted
in all material respects including (i) necessary Permits for any
export
transactions, (ii) necessary Permits and clearances for the
disclosure of
information to foreign Persons and (iii) necessary registrations
with any United
States Governmental Authority with authority to implement
applicable export
control Laws;
(c) Seller has not participated directly or indirectly in any
boycotts
or other similar practices in violation of the regulations of the
Export
Administration Act (50 U.S.C. App. Section 2401 et seq.) or Section
999 of the
Code; and
(d) Seller has complied in all material respects with the
Foreign
Corrupt Practices Act.
3.28 HMSGTA Consistency. The disclaimer, indemnity and
insurance
provisions of Articles 11, 12 and 13, respectively, of Part 1 and
the warranty
provisions of Articles 1 through 5 of Part 3 of the BCA Hardware
Material
Services General Terms Agreement are consistent with Seller's
standard practice
in the BCA Hardware Material Services General Terms Agreement
V3.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Subject to the disclosures set forth in the Schedules of Buyer
delivered to Seller concurrently with the parties' execution of
this Agreement
(each of which disclosures shall clearly indicate the Section and,
if
applicable, the Subsection of this Section 4 to which it relates,
and each of
which disclosures shall also be deemed to be representations and
warranties made
by Buyer to Seller under this Section 4), Buyer hereby represents
and warrants
to Seller as follows:
4.1 Organization of Buyer. Buyer is a corporation duly
incorporated,
validly existing and in good standing under the Laws of the State
of Delaware.
Buyer has the corporate power and corporate authority to own or
lease and
operate its assets and to carry on its business in the manner that
they were
conducted immediately prior to the date of this Agreement. Buyer
was created
solely for the transactions contemplated hereby, is indirectly
majority owned
and controlled by Onex Partners, LP, and, except for obligations
incurred in
connection with its incorporation or organization or the
negotiation and
consummation of this Agreement and the transactions contemplated
hereby and
except as set forth on Schedule 4.1, has not incurred any Liability
or engaged
in any business or activity of any type or kind whatsoever or
entered into any
agreement or arrangement with any Person.
4.2 Authority of Buyer. Buyer has the corporate power and
corporate
authority to execute, deliver and perform this Agreement and each
of the Buyer
Transaction Agreements. The execution, delivery and performance of
this
Agreement and the Buyer
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Transaction Agreements by Buyer have been duly authorized and
approved by
Buyer's board of directors and do not require any further
authorization or
consent of Buyer or its stockholders. This Agreement has been duly
authorized,
executed and delivered by Buyer and (assuming the valid
authorization, execution
and delivery of this Agreement by Seller) is the legal, valid and
binding
agreement of Buyer enforceable in accordance with its terms, and
each of the
Buyer Transaction Agreements has been duly authorized by Buyer and
upon
execution and delivery by Buyer will be (assuming the valid
authorization,
execution and delivery by each other party thereto) the legal,
valid and binding
obligation of Buyer enforceable in accordance with its terms, in
each case
subject to bankruptcy, insolvency, reorganization, moratorium and
similar Laws
of general application relating to or affecting creditors' rights
and to general
equity principles.
4.3 No Violation of Law and Agreements. The execution and delivery
by
Buyer of this Agreement and each Buyer Transaction Agreement, and
the
performance by it of its obligations hereunder or thereunder, do
not and will
not:
(a) violate any provision of the certificate of incorporation
or
bylaws of Buyer;
(b) (i) violate any provision of applicable Law relating to
Buyer;
(ii) violate any provision of any order, arbitration award,
judgment or decree
to which Buyer is subject; or (iii) except as required under the
HSR Act, ITAR
or the Exon-Florio Amendment, require a registration, filing,
application,
notice, consent, approval, order, qualification or waiver with, to
or from any
Governmental Authority, except in any case under this clause, any
violation,
breach, default or non-compliance that would not individually or in
the
aggregate be reasonably likely to have a material adverse effect on
Buyer's
ability to consummate the transactions contemplated hereby or
perform its
obligations hereunder or under the Transaction Agreements; or
(c) (i) require a consent, approval or waiver from, or notice to,
any
party to any Contract to which Buyer or any Affiliate thereof is a
party, or
(ii) result in a breach of, cause a default under or result in the
acceleration
of any obligation or loss of any benefit under, any Contract to
which Buyer or
any Affiliate thereof is a party, except in any case, any failure,
breach,
default or non-compliance with respect to any of the items in (i)
or (ii) above
that would not reasonably be likely to have a material adverse
effect on the
ability of Buyer to consummate the transactions contemplated by
this Agreement
and perform its obligations hereunder and under the Transaction
Agreements.
4.4 No Litigation or Regulatory Action. Except as set forth on
Schedule 4.4:
(a) There are no Proceedings pending or, to the Knowledge of
Buyer,
threatened against Buyer or its Affiliates which would reasonably
be expected to
prevent, hinder or delay the consummation of any of the
transactions
contemplated hereby; and
(b) There is no Proceeding pending or, to the Knowledge of
Buyer,
threatened, that questions the legality or propriety of the
transactions
contemplated by this Agreement or any of the Buyer Transaction
Agreements.
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4.5 No Brokers. Neither Buyer nor any Person acting on its behalf
has
paid or become obligated to pay any fee or commission to any
broker, finder or
intermediary for or on account of the transactions contemplated by
this
Agreement.
4.6 Financial Ability. Buyer has obtained a commitment letter
from
Citicorp North America, Inc. to provide debt financing, which
commitment letter
is in full force and effect and has been delivered previously to
Seller (the
"Financing Commitment"). Subject to receipt of the debt financing
contemplated
by the Financing Commitment, Buyer will have on the Closing Date
the financial
ability to consummate the transactions contemplated by this
Agreement.
4.7 Capital Structure. As of the Closing Date, Buyer will have
equity
in an amount which represents at least thirty percent (30%) of the
sum of
Buyer's Liabilities for borrowed money (excluding any Assumed
Liabilities) plus
all equity, but in any event equity of no less than three hundred
and
seventy-five million dollars ($375,000,000).
4.8 Service Acknowledgment. Buyer acknowledges that Seller and/or
its
Affiliates provide the Business with the services listed on
Schedule 3.21, which
services are necessary for the ongoing operation of the Business
and that
certain assets owned by Seller and/or its Affiliates which are
necessary to
provide such services will not be purchased by Buyer under the
terms and
provisions of this Agreement. Accordingly, in order to conduct the
Business in a
manner similar to that conducted by Seller, Buyer must provide
itself, obtain
from Seller pursuant to the Transition Services Agreement, or
obtain from third
parties, such services.
4.9 Independent Analysis. Except pursuant to the Seller
Transaction
Agreements, Buyer recognizes that Seller has not made any
representation or
warranty upon which Buyer is relying with respect to the ability of
Buyer to
obtain business from Seller subsequent to the Closing Date. Buyer
further
recognizes that, except as set forth in the Seller Transaction
Agreements, any
cost estimates, projections or other predictions contained or
referred to in the
Schedules hereto or in the information provided to Buyer
(including, without
limitation, the information provided in the
